Daily Market Update: High rents freeze out new homebuyers

by MPA17 Mar 2015
Rents “unsustainable”, freezing out new homebuyers
A new report reveals that renting is becoming less affordable in many parts of the United States. The National Association of Realtors (NAR) said the gap between rents and incomes is widening to “unsustainable levels” and is calling for more building to ease the pressure on demand.

The effect of high rents makes the step to home ownership even harder, according to NAR chief economist Lawrence Yun. “With rents taking up a larger chunk of household incomes, it’s difficult for first-time buyers – especially in high-cost areas – to save for an adequate downpayment.”

The association studied data from the last five years and found that major metros such as New York, San Jose and Seattle have rent growth far exceeding wages; in New York rents have increased by more than 50% over a five-year period.

Yun said that typical rents have increased by 15% while income has increased by 11% and with house prices increasing too, renters hoping to buy are struggling. Yun stressed the need for more home construction, especially for those that are affordable for first-time buyers.

Mayor hits back at Madonna over town criticism
Madonna has upset the residents of Rochester Hills, Michigan, after calling them “basic, provincial thinking people” on the Howard Stern Show. Her comments have prompted the city’s mayor to write an open letter pointing out that the singer’s hometown has some huge positives.

Bryan Barnett highlighted the city’s schools and universities, its high level of patents granted to residents and its prolific building of robots. He also focused on the city’s impressive list of Olympic athletes, medical and education visionaries and “even a top selling global singer-songwriter.” He has invited Madonna to return to Rochester Hills to see for herself concluding that, “While we certainly don't need your stamp of approval, I am quite confident we would earn it.” Read the full letter.

Seattle real estate industry focuses on affordability
The real estate industry in Seattle is increasing pressure on city mayor Ed Murray ahead of his taskforce’s report on affordable housing. However, there is not a unified opinion on what needs to be done, with business groups and activists opposed on some issues including a proposed fee for developers and local rent control.

The Seattle Times reported that a number of groups have submitted proposals to the taskforce, which will report at the end of May. With house prices and rents soaring in the city the one thing they can all agree on is that action is needed to address affordability in Seattle. Read the full story.

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