On Monday the country celebrated Labor Day, the federal holiday that honors American workers and all they do for the country. Americans work hard to feed their families and put roofs over their heads, so it’s nice that there is a national holiday that acknowledges that. In light of this (and last week’s post about Trulia’s most recent Rent vs. Buy report), we thought it might be interesting to look at how much labor actually goes into renting a house in Phoenix.
In order to find out how long one has to labor to pay the rent, we need to know the fair market value of the rental property and the income of the renter. For our example, we’ll assume the renter wants a modest, 3-bedroom home and that he or she earns the average salary for a Phoenix professional.
According to Payscale.com’s crowdsourced salary surveys, the average salary in Phoenix is $53,855. That comes out to $25.89/hr or $207.12 for an 8 hour day. Based on the findings of the National Low Income Housing Coalition (NLIHC), one can expect to pay approximately $1474/month for modest, three-bedroom rental in the Phoenix-Mesa-Scottsdale Metropolitan Statistical Area (MSA). With these givens, our renter would need to work 57 hours–that’s seven 8-hr “labor” days, plus one extra hour–in order to pay the rent.
Incidentally, this comes out to 33% of our renter’s income, which is just over the recommended 30% housing-costs-to-income ratio for what is considered affordable housing. Renters who make less than $25.89/hr, will find rental costs even less affordable. In fact, the NLIHC calculates that a renter would have to earn $28.35/hr in order for our example home to be affordable.
Given all this and Trulia’s Rent vs. Buy report we talked about last week, it would seem that now is a great time to buy a home in Phoenix. We’d like to help you do just that, so get in touch with the Contact AZ Mortgage Brothers today, and see how we can help you!