How Can People Afford to LIVE?

I belong to an organization called "NextDoor" which connects people in a sort of social network that's based around your local community. What's cool about it is that even though it's a large national organization, it focuses on locals helping locals-- and it's even subdivided into neighborhoods.

Tiny Cottage For Rent!

Anyway, one of the posts this morning was about a "cottage for rent" nearby, here in our town. Now, let's keep in mind here that I live in a smaller town of some 10,000 people, not in a big expensive city.

So here you have this cottage that looks quite nice and clean, and basically consists of a small bedroom, a half bath with shower, and a living/kitchen/dining space. Quite tiny, in other words. 

$950 a month.

Maybe I have been living under a rock, but how the hell can people afford to LIVE anymore?

What's my point here?

Something isn't quite right here.

Twenty years ago, that cottage would have rented for about $500 a month... 

Since they are asking $950 today, that ostensibly means rent has gone up 90% over that 20 year period.

Meanwhile, median household income in 1997 in the US was $55,218.

Median household income in 2016 was $59,039.

That represents an increase of about 7%.

See the problem?

And it's not just locally. Just for grins, I checked the 1-bedroom apartment I lived in when I first moved to the USA in 1981. Back then, the rent was $220.00 a month. 

Using the inflation calculator for the US, and going forward to 2017, that apartment should rent for $597.00. Guess what? The building is still there, and I just checked their rentals page... 1-bedroom apartments now "start at" $950.00 there.

Somehow, that just seems a little bit out of alignment to me.

The Affordability of Living... or NOT

Although housing seems to be one of the most affected areas, it is by no means the only one. 

Here in the USA, insurance costs have also outstripped the rise in incomes by quite a wide margin, in part due to an aging population, but also due to the fact that we're a litigious bunch and that drives up costs.

Sure, you can look at "absolute" incomes and claim that we're "better off than ever" but there's a "lie by omission" inside that statement... namely that what we have to be able to BUY with that "more than ever" has risen faster than incomes, for the past 40 years.

Which leads me to the original question "How can people afford to LIVE?"

How about you? If you live in the US, have you felt the pinch of living costs rising faster than income, and especially housing? If you live elsewhere, does your country experience something similar? It used to be a standard that you were "rent stressed" if rent/mortgage was more than 30% of your total income. That has changed for many. Has it changed for you? Leave a comment-- share your experiences-- be part of the conversation!

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Created at 171029 16:52 PDT