Americans overspending on rent

Some new statistics are highlighting the realities of the current rental landscape. According to a Harvard University study 21.3 million people are spending 30% of their income on their rent alone. Financial advisors generally suggest that people spend about 30% of their income on total housing costs, including utilities for example.

Bill Martin, president of ERA Martin says he believes it’s better to invest and own a house rather than rent. 47 ABC spoke with Martin and he says, “I think for most renters – they should evaluate the possibility of their purchasing a home.”

But not everyone is in a position to buy. Martin tells 47 ABC, “Well the rental market on Delmarva like anywhere in the country is driven by demand. So when you have young people, you have people getting into new jobs, they need rentals they can’t really buy at that point in their careers.”

Here on Delmarva if you’re looking to rent on the lower end of the market officials say it can cost you around $750 per month. Upper end of the market can cost you $2,000 per month. But there are some upsides to renting. If something goes wrong maintenance wise, you’re generally not responsible for it. It’s also much easier to get out of a lease – than sell your home.

47 ABC also spoke with Steven Sweigert, an investment advisor at PKS. Sweigert says, “About 50% of all of your income should be spent on what we consider necessities so housing, cars, food, you know all of that so again everyone’s different but those are just the general rules of thumb.”

Sweigert adds that 30 percent should be used as discretionary and 20 percent should be stored away into savings. As far as building those savings, he says, “One strategy that I like very simply its just pay yourself first.”

Sweigert also says that he sees people waiting longer to make those big decisions like buying a house and having kids so they can get all their ducks in a row financially.