I recently met with a woman who wants to sell her current home and move into a different house or maybe a condo. I told her I could sell her home in a heartbeat with multiple offers, but we won't find her a place to live very quickly. It's like going to the store to purchase apples, but all that's available is a brown rotten apple, an unripe apple and an overpriced red apple. I've shown those three apples over and over—basically, inventory is horrible. My advice was, "Rent first while we look for something to sell you!"
Apartment List's Rentonomics blog reported in December that the "national median two-bedroom rent is $1,160, up 2.7 percent" over the previous year. And a scary fact: "The share of occupied rental units under $800 fell by 27 percent from 2005 to 2016." If you're an hourly or low-wage earner, you're screwed. Out of all the available rental stock, affordable housing rental inventory has decreased by almost one third. The report also found that the share of "high-income renters" in the top 100 metros increased by 4.2 percent" in that same time period. The rich get richer.
The site released its monthly report for January and found that rents are on the rise in Salt Lake City, with the median two-bedroom apartment rent up 6.3 percent in the past year. Although the national average for a two-bedroom rental is $1,160, Rentonomics found SLC's median to be $1,050 for the same unit.
Lenders like to see that your housing cost is no more than a third of your monthly income. If you're earning $16 an hour, multiplied by 2,080 hours in a year working 40 hours per week with no time off, your gross wage would be $33,280—about $2,773 per month. A lender would say you could have a mortgage payment of $875 (not including utilities) or less per month if you have low debt and great credit. Futz with your debt and put high balances on credit cards or be late on payments and you wouldn't qualify for even that amount. On a $200,000 home, with $100,000 as a down payment at 4 percent interest, your estimated house payment would be $831 (including interest, principal, taxes and insurance). But who has $100K to put down and where's a $200,000 home to buy? That's less than two-thirds the cost of a home in SLC on the market right now (the median list price is $330,000 according to realtor.com). And if low-income rental inventory drops by a third every decade, prices will certainly increase quickly given that we're one of the fastest growing areas in the country.