When it comes to comparing the costs of buying versus renting a home, Charlotte area residents are likely to find a better value in buying, according to the results of a recent study, reported by
New Study Shows Many Charlotte Renters Are Cost Burdened
When it comes to comparing the costs of buying versus renting a home, Charlotte area residents are likely to find a better value in buying, according to the results of a recent study, reported by the Charlotte Business Journal.
The new study, compiled by rental search site Apartment List, and based on U.S. Census figures, showed that 44.2% of renters in the Queen City were cost-burdened in 2016, paying at least 30% of their annual incomes on housing. Upon closer analysis, the report found that of those renters who were cost-burdened, nearly half - or 23.6% - fell into the category of "moderately" cost-burdened, meaning they spend between 30% and 50% of their pay on rent alone. The other 20.7% paid more than 50% of their annual salary on rent, making them "severely" cost-burdened.
So, with so many Charlotte renters spending a significant portion of their incomes on putting a roof over their head, it's not surprising that this hampers their ability to build their savings, which can keep them from buying a home, which means they continue renting, and the cycle continues. To break the rental cycle is something many of today's Americans hope for but have difficulty achieving.
There is good news, however. According to the report, Charlotte's percentage of cost-burdened renters fell below the national average of 49.7%. Also, when compared to the nation's 100 largest metros, Charlotte ranked relatively low on the list when it came to cost-burdened renters. The upside here, is that if you love Charlotte and you want to live here, but are unable or just not ready to purchase a home, it's still relatively affordable when you compare it with other large cities throughout the nation.
According to the report, Charlotte had the eighth-most affordable rental market of the 100 largest U.S. metros in 2016. Another North Carolina city - Raleigh - came in as the third-most affordable rental market. Approximately 42% of renters in the state's capital are considered cost-burdened (spending at least 30% of their annual income on housing).
Other metros that were among the most affordable rental markets for 2016 were mostly found in the South, the Midwest and within the Rust Belt, the area of the Midwest and Great Lakes region marked by deindustrialization and economic decline. Ogden, Utah had the lowest percentage of cost-burdened renters at 37.9% followed by cities such as Louisville, Ky.; Knoxville, Tenn.; Cleveland and Pittsburgh.
On the other end of the cost-burdened spectrum, Miami had the highest percentage of renters who spent at least 30% of their incomes on housing at 62.8%. Other cities with high percentages of cost-burdened renters included several in California such as Fresno, Riverside and Los Angeles.
"Cost-burden rates are driven by both changes in rent and changes in income, leading renters in some pricey cities such as San Francisco and Austin (Texas), to fare better than renters in struggling metros, such as Chattanooga (Tenn.) and Hartford (Ct.)," states the report. "Renters fare best in metros with moderate rents and strong wage growth, including Raleigh and Pittsburgh."
In Charlotte, rental pricing increased 10% from 2005-2016; however, the study found that the growth was buoyed by an income growth of 13.4% for local renters. As long as wages continue to advance at a higher pace than rent, it doesn't appear to be a dire situation. That being said, it looks as though it is still a more affordable option to buy in Charlotte and in many cities throughout the United States. The report points out that only 28.3% of homeowners were considered cost-burdened in 2016, compared to the nearly half (49.7%) of renters.
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