Dr. Housing Bubble 10/27/14

[Crewleader]

Rental rates are outpacing wage growth: What are the implications of rising rents when wages are simply not keeping up?

There are bigger implications to the economy when rental rates are increasing at a rate faster than wage growth. This is important because we have added 7 million renting households in the last few years. For the moment, it simply looks like more money is going to be funneled into the housing market versus other segments of the economy. If your rent went up by $100, that is $100 that is not being spent on other sectors of the economy. Amazon already showed some hints that consumers are looking tapped out. Of course the holiday spending orgy is around the corner so we shall see. Falling gas prices help a bit but for consumers, housing is the biggest monthly line item expense. Landlords like home sellers are going to charge as much as they can. And with many homes now being owned by large investors, we are seeing steady rent increases in many markets. How far up can rents go? For rental rates, you are capped by what local area households can pay from actual income. It might be useful to examine the rate of increase between wages and rents.

Wages and rents

http://www.doctorhousingbubble.com/rental-rates-wage-growth-rents-versus-incomes/