1 in 4 Renters is Severely Cost-Burdened, 50% of more of their Income on Rent | Hacker News Reader

1 in 4 Renters is Severely Cost-Burdened, 50% of more of their Income on Rent

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32 pointsSQL221915 comments

When I was young I have been told that your rent should not more than 1/3 of your income. This was meant as a rule of thumb. Also this would apply for the majority of people. If you make 10 million a year and pay 5 million on rent you probably still have enough left to get by.

I still run into (elderly) people who expect a mortgage to be about three to four times a person's salary. When the houses costs eleven times the median salary, that would require a deposit of seven times a person's salary. The past was a different (cheaper) world when it came to the largest expense most people have.

> I still run into (elderly) people who expect a mortgage to be about three to four times a person's salary

I'd argue that's still a reasonable target, most places in the US. The pockets where things are insanely, insanely expensive are smaller than you might think - especially if you spend time reading the comments here on these kinds of articles.

Not necessarily true, we've all heard about rock stars and movie stars seemingly blowing through millions.

You gotta budget; and if you can't make more than you spend you're going to have a bad time.

We'd think blowing through 5m a year would be hard, but I'd bet there's people out there doing it every day.

Without blowing it on drugs, gambling, cars, housing, or ridiculously priced hotels, I don't know how I'd spend $5 mil a year. That's about $13,700 per day.

Agreed, I think you really need most of those five things.

I spend 50% of my income on rent. I am not cost burdened in any meaningful sense: the remaining 50% is more than enough to live on (just not enough to buy a condo with).

It would be more interesting to know the absolute dollar amounts people have after taxes and rent, rather than the percentage spent.

Baumol cost disease is relevant here. Rent, education and healthcare all continue to go up. All else goes down.

https://en.wikipedia.org/wiki/Baumol%27s_cost_disease

I think savings rate is much better suited as a primary percentage-based metric to track on to see how people are doing. For those who have low to 0 savings rates, we can then look at why that is - and most the most likely case would be high housing costs.

_Those_ people are burdened, whereas you are not (I'm assuming you are able to save).

I think that depends on the goal you’re saving towards. Mortgage down payments, college tuition, etc. aren’t that dependent on your income - saving 80% of a low income is likely worse than saving 10% of a high income.

Agree, especially since many other costs tend to be more fixed (or at least grow fairly slowly as a function of income). In this case % of income doesn't seem to be a super helpful metric.

Guessing no wife or kids?

Is it safe to assume that they are defining "income" as "after-tax income"?

Take home. Otherwise, using gross pay doesn't really mean much since tax rates are so individualized

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