Tuesday, April 18, 2017

Income Required for a Median-Priced Two-Bedroom Apartment.

In 2006, the hourly wage required to afford the average market-rate priced two-bedroom apartment was $16.31 an hour.  This equated to $2,287 a month or $33,925 a year.  Assuming the limit of affordability at 1/3 the monthly gross income (1/2 net income after taxes), the average market rate nationwide was $942.00 a month.

What are the requirements in 2017?

Source: ZeroHedge via The Automatic Earth
Well it looks like the average rent is about $1,540 a month.  So what are the income requirements? Gross monthly income required to be able to afford one at 33% affordability index is $4,620 a month, $55,440 a year.  This computes to an hourly wage of $26.65 an hour. Half of that for a two-wageearner family is $13.33 an hour. An HOUR! Clearly, a lot of businesses cannot afford to pay this kind of wage, especially when their establishments are subject to the same insane rent inflation that residential apartments' prices are going through.

Which is why half of all people have a family income less than the (2015) median of $56,516.

What kind of a madhouse country when you need to have the kind of wage distribution close to the average that people like Barbara Ehrenreich found was found to exist in places like Key West FL (yes, I know: an expensive outlier), Portland, ME and Minneapolis-St Paul, MN.  The rental rates affordable enough for those making minimum wage ($7.25/hr for two wage earners per household) exist only in the markets at the low end of the scale below for average market rates, measured county by county:

Source: ZeroHedge

You see, the cheapest is about half the national average and a lot are bunched right around this average of $1,540 a month.  Half the rest are distributed in-between and the remainder above the average, up to about $4,800 a month (San Francisco).  Obviously the more expensive markets have a severe affordability problem and the less expensive markets probably have a jobs shortage.

We need to stop the inflation in property sales and rental prices.

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