How Much do you Need to Earn to Afford a Modest Apartment in Your State? | Hacker News Reader

How Much do you Need to Earn to Afford a Modest Apartment in Your State?

nlihc.org

41 pointsdsr_46 comments

So I live in one of the red states, and I live in one of the more expensive areas of that red state (but by no means the most expensive of those areas). But the vast majority of the state is pretty rural and correspondingly cheap. Maybe not Blue-state (on this map) cheap, but definitely tan -- since I know more than one person that gets by on $15-20 and has a two bedroom or better.

No surprise, extremely rural areas are cheaper and states with massive urban areas are more expensive. Wyoming is cheaper than Colorado despite being similar-ish states next to one another. In Wyoming, you're glad to see another human, in Colorado, a similar sized state with 10x the population, there's a lot more people around.

There's a similar pattern with Oregon and Washington.

So it's basically a population map [1] with a few outliers - Alaska, Hawaii, Pennsylvania and perhaps Michigan and Illinois.

It would probably just be better to focus in on those weird states and show why they're weird -- above or below their expected categories.

1 - https://xkcd.com/1138/

Without looking too closely at it, the infographic looks suspiciously similar to this one: http://slatestarcodex.com/2013/04/04/lies-damned-lies-and-fa... . Does that same rebuttal apply, or are these numbers more accurate?

Thanks, I was going to post the same link.

Basically the more interesting stat, is that Union membership in this country is in danger of dropping into single digits[1] and that has two effects, one it increases the ability of companies to keep wages low, and perhaps more importantly to unions it disempowers them from the political scene. From as far back as early 2014 there have been a large PR campaign to push for unionization, from trying to demonize companies like Uber or Instacart which pay a minimum amount to the people that make the companies work, to stuff like this which tries to position the world as unaffordable as the "rich" race away with the money.

But submarine PR or not, its important to put stories you see in the context of who benefits and how. Critical thinking and reading is key here.

[1] http://www.bls.gov/news.release/union2.nr0.htm

Given the explosion of interest in real estate from investors, I think situation going to get much much worse. I'm seeing houses going for 20% prices above asking prices, aggressive bidding wars, all cash deals - mostly from buyers who have no intent to actually live in those houses. If you search Zillow you will find tons of houses getting sold in 1 week and then immediately put back in market as rental properties. The rents are usually approximately set at 5% of house prices. This clearly means investors are considering real estate as something that has great returns while being well inflation protected. It's simply much better option that things likes long term CDs or TIPS etc. If this investment efforts are actually successful, most people - even in upper middle class - should expect to be able to only rent.

This is pretty much the situation in the UK for the last few years, although the rents are closer to 10% the property value. Where I'm from, a nice area but pretty limited job prospects in any industry, a 2 bedroom apartment sells for £150k ($220k) and rents for £800 ($1200) a month.

I've posted this before, but it's germane here: http://www.buzzfeed.com/dlknowles/britains-dysfunctional-pro... . The UK and London in particular has essentially decided to make increasing the supply of housing through building more of it extremely, extremely hard. Econ 101 suggests that holding supply constant as demand increases will raise prices.

The solution is intellectually easy but politically difficult. The UK can, if it so chooses, make housing much less expensive by simply letting markets function.

Which part of the UK are you in? I knew there was a growing housing problem nationwide, but it's always interesting/depressing to hear specifics.

I'm in Aberdeen, and I've noticed the same kind of issue, except here renting a two-bed in a not-crappy part of town is £1,000+ per month. A crappier area, like where I live, is between £700 and £800. A nice area is in the region of £1,500.

Here, the (currently stuttering) oil industry has had a huge intensifying effect on price rises, both by putting more well-paid people into the rental market and by creating a larger than average pool of Buy-to-Let landlords looking to invest their oil earnings in property "for their retirement".

I'm not there anymore, but this is West Dorset. It's a nice place to raise a young family, but the job prospects are few and far between. It's a bit too far to commute to major cities unless you want a 3+ hour drive or train journey each day. Unless you are happy working in Tesco or being an office administrator, all young people will gravitate towards London. The biggest industry is tourism, but that of course is very seasonal.

There is a lot of new development going on (around 60/40 split between green and brown field) most of it being retirement apartments. They are a great idea as they create jobs and relieve housing demand, but at ~£300k they are well out of the price range of most local people.

Never draw long term conclusions from real estate. It is the most cyclical of cyclical markets. Money is historically cheap, when that changes... Boom.

But in what region? The whole point of the post is how much it varies depending on where you live.

Worst yet, this is happening worldwide as investors realizes this is a not heavily regulated investment methods.

Just get a roommate? When did a two-bedroom apartment become a human right? Housing costs are high, undeniably, but the real issue is the shit job market.

You're not going to get a family of 4 into a one-bedroom.

This story is about families.

Single-people don't even need to pay for their own place. They can live with their parents.

At age 32? What if their parents are on minimum wage too?

>> When did a two-bedroom apartment become a human right?

The title is "one-bedroom". Did you even read that far?

But if you read further into the linked article (http://nlihc.org/oor), it talks about "two bedroom unit".

The original title of this submission "In No State Can A Minimum Wage Worker Afford A One Bedroom Apartment" is linked to an entire different link (http://www.zerohedge.com/news/2015-05-22/no-state-can-minimu...).

Edit: since the title of submission has been changed.

"In order to afford a modest, two-bedroom apartment in the U.S., renters need to..."

First paragraph.

Article does bounce between 1 and 2 bedroom apartments.

For what it's worth, apartments are often more expensive to rent in my area than houses.

A one-bedroom is an even bigger luxury than a two-bedroom. You can get a roommate and share a two-bedroom.

That map sure looks nice. On the other hand, it's nearly impossible to actually get the stats for Kansas, because it decides I want Colorado or Iowa and the resulting popup covers Kansas. But it's the design the really matters, not the data, right?

In case you are still interested in those stats, it looks like following a link in this format: http://nlihc.org/oor/<state> can get you them.

Eg: http://nlihc.org/oor/kansas or http://nlihc.org/oor/michigan

For anyone else wondering what the criteria for "affording a two bedroom apartment" is, it looks like they define it as having the yearly rent cost be less than or equal to 1/3 of your yearly income (pre-taxes).

On the other hand, according to [Numbeo survey](http://www.numbeo.com/property-investment/gmaps_rankings.jsp) , US has one of the lowest income to property pricing ratio worldwide. Whereas in the third world and developing countries, people are also struggling to afford a place to live.

For Southern California, and the Los Angeles area in particular, this is a very good blog to read: http://www.doctorhousingbubble.com/

Their current (May 29) entry is titled "Don’t hold your breath for Millennials to purchase homes: 6 years into a recovery and Millennials are still moving into parental homes at record levels."

How has this changed over time?

After looking at this for my home state - while thinking about the area I live in, I decided that it's more fair to say that this applies to large, populated cities. It'd be more interesting and relevant to do a rent breakdown by population density areas.

State wide prices are pretty useless. They claim the highest wage required for a 2bd unit in CA is ~$27/hour. I make about this much, and in the bay area actual 2bd rent prices would be 60-70% of my post tax income, before any utilities/etc.

The data for North Dakota might as well be divided into east and west. I believe the number for the eastern part of the state, but the western part requires a much higher wage. Witness how much McDonalds is paying in Wiliston, ND.

Right, this would be much more meaningful if it was calculated on county or district or some other fine granular area. States are far too diverse for this to be interesting.

It is, click on a state.

I just get a pop-up that blocks out the entire state with a "more info" button and definitely not a map by county, but I can fuss around and choose specific counties.

The same is true for Illinois. Close to 80% of the population lives within 50 miles of Chicago. Almost everywhere else has a much lower cost of living. Only four towns outside of the Chicago metro area have more than 100,000 people, and two of those are just outside.

Even from suburb to suburb, the amount of house $200,000 buys you varies greatly.

Expensive urban areas suffer from an excess of demand for housing, while the stock of houses is naturally limited, pushing the rental rates through the roof. A good example would be London, UK. New York and San Francisco in the US are other good examples. People want to move there, because they are attracted by the jobs. The question is now, of course, why do employers want to move there? Because their customers are there? I doubt it. The economies of SF or NY obviously feed on the rest of the country. Because labour is cheaper there? Also not. With communication channels pretty much of equivalent quality across the country, there is no rational, justifiable reason for an employer to set up his offices in an expensive urban area. He is just pushing down the standards of living for the lower salary rungs of his staff.

> People want to move there, because they are attracted by the jobs.

I think there is more to it than that: people like functional public transit systems, people like the concentration of others with similar interests, people like diversity, people like living arounds lots of restaurants, bars, entertainment...

while the stock of houses is naturally limited

Actually, housing stock is not "naturally" limited; it is quite artificially limited: see e.g. http://www.amazon.com/Rent-Too-Damn-High-Matters-ebook/dp/B0...

> The question is now, of course, why do employers want to move there?

Everytime I go to NYC I wonder this very thing. Looking at the tiny, tiny offices and how expensive EVERYTHING is I don't really understand why there are so many companies there. I guess it's a bit of PR / marketing but surely having offices there (especially in Manhattan) doesn't make sense otherwise, right?

Though I could be missing something. I just feel like it has to be mostly PR / marketing.

> The question is now, of course, why do employers want to move there?

Because those places are very good places for rich people -- because they have enough of them close enough together to support services catering specifically to them -- and because employers (at least, the executives making decisions for them) are rich people.

A two bedroom unit is for a family (a couple with a kid or two kids), not for a single person. Why would a minimum wage employee lives in a two bedroom unit?

- Single-parent families, with a parent living on minimum wage.

- Students.

- People are expected to leave their parents house at age 18. But without a proper trade skills, they can only earn minimum wage.

- etc.

But we may be missing the point here. Since this article doesn't seem to take into the consideration of other living expenses, even if we're talking about a family with two parents and kid instead of a single person: the family may still struggle to pay the rent plus bills.

While I agree about the single-parent families, I disagree about students. No way a student needs a two bedroom accommodation.

I'd go one further and say that in some regions, a single-bedroom unit is for someone making pretty good wages. I've never known anybody on minimum wage in California not to live in shared accommodation (mostly because it's impossible).

Deleted comment

"For every complex problem there is an answer that is clear, simple, and wrong."

Is $20,000 a hard number. What if you make $20000 this year and would like a raise. That would automatically be detrimental, forcing you to either not take it until that raise is >20% over $20k. Then since is rent money, and you would have to income taxes on this additional money over $20k you would actually need 20% + 15% over 20k just to break even on what you were saving in rent.

Usually with caps like this the break is phased out. So if you make between e.g. $20k and $25k, maybe only x% of your rent is paid for, where x is between 0 and 20.

So, an individual buys a one family home, at a convenient location, with the intent of renting it out as an income-producing property. The person pays extra money, since a more desirable piece of property is more likely to stay occupied and produce rent.

The owner gets it ready for rental, and selects a rental price. The rental price covers the costs of buying the property, improving the home, paying taxes, and a percentage to ensure repairs and upkeep over time, with the hopes that a portion of the money dedicated to upkeep will eventually become profits, depending on tenant churn.

Someone shows up seeking to rent, and just happens to make less than the magic number (under 20K for example), so the owner has to forfeit the portion of the price that covers taxes and upkeep.

The owner is expected to make a decision that will turn a potential source of income into a potential burden, which risks falling into disrepair. How then is this decision expected to play out?

Income level isn't a protected class in the Fair Housing Act, so it's possible to just refuse to rent to such people.

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