Rent, yearly increases, and how much can I actually afford?

[zillah975]

So, I may not be thinking 100% clearly about this, due to some RL stuff (two deaths in my immediate family, craziness at work, etc), but let me lay this out for y'all and then ask a couple of questions.



I've been living in my apartment for 4 years as of August 31st. My lease is up for renewal, and the rent they've offered me to renew for 12 months is 12% higher than my current base rent. For 10 months, it's 10% higher. Less then 10 months and the rate skyrockets even further. A 12 month lease would put my rent at 34% of my net income.

When I questioned this, they assured me that it's standard. But that doesn't make sense to me, because if rents for current residents are rising at a rate some 2 to 6 times that of what most of us can expect for a salary increase -- if we can expect one at all in this economy -- than how are we supposed to develop any kind of stable housing history? Are we to either expect move every year or two, or to chose a place that's half what we can afford now in hopes we can still afford it in 3 or 4 years? And how are apartment managements supposed to maintain any kind of stable community? They'll just have a constant stream of folks moving in and out as current residents are priced out of their homes. That seems like it would lead to an unhealthy community and would negatively affect their ability to get folks to come live there.

And second, so, of course I've been considering moving. I'll be talking to the leasing agents about this increase thing, but I doubt they'll write anything into the lease for me so it's really just a conversation -- I was told here that rents never rise very much either. And I've been trying to figure out how much rent I can afford. My credit card debt is about 5% of my net salary and my car payment is around 12% of my net, and that's the only debt I have right now. After that, I have pretty much just the usual expenses -- insurance of various kinds, groceries, gas for the car, cable, mobile phone, etc.

But when I look for "how much rent can I afford" calculators, the one thing they never tell you is whether you're calculating on annual net income or annual gross income.

And so, the questions:

Does it make sense to y'all that rents would typically rise 10-12% for current tenants each year? Have other people here experienced this same kind of rent hike? How is a resident supposed to manage that if their salary isn't increasing at the same rate? (And if your salary is increasing at that rate, where do you work and are you hiring?)

And assuming that rents don't rise more than 5% on a current resident, does anyone know what percent of their net income a person should expect to pay in rent?

Alternately, if you have found that lease renewals typically offer such a high increase, how do you plan for and manage that?

Comments

[foxfirefey]

They way you describe it, the apartment complex isn't rising rates 10-12% every year--it's once in the four years you've been there, which is closer to 3% a year. It's still a hard thing to swallow, but you should look around the area and see what the market rate for your type of apartment is. Rents have been rising most everywhere in the US, at least.

[panda]

3% increase per year is what I experienced when I rented at a couple different places from 05-09. If your rent actually stayed the same for the previous 4 years, that is unusual to me. But if it has actually been a 10% increase /each/ year, then that does seem excessive.

Also 2nding everyone who's said rent should be no more than 1/3 of your monthly budget. When I was a poor college student trying to rent a place off loans and donated money from my parents, when I applied to rent at a new place, part of the application involved saying what my monthly net income was, ie how much money would I actually have to pay the bills? I was told by the employee who was over-seeing my application to exaggerate how much money my parents were giving me each month, because the company would reject my application if rent was more than 1/3 of my "income." I guess this is because in the company's experience paying more than 1/3 of your income in rent is unlivable in the long run, and so those kinds of renters are more likely to flake out on them. I did always pay my rent, but I also had to beg my parents for emergency additional money several times, so yeah, having your rent be more than 1/3 of your monthly budget is not a great idea.

[zillah975]

Yeah, it's increased every year I've been here, though not by 10% each time. The increase itself has approximately doubled each year; if I stay and the trend continues, then next year it'll go up by another $220. And I just don't know who can afford that kind of increase, you know? Who gets raises that can match that, and can I have their job?

[panda]

Oh that is total bullshit then. I was renting in a university town with a lot of turnover etc and the highest increase I ever saw was 5%.

I really have no idea how they think that kind of increase is sustainable.

[zillah975]

Mmm, I wasn't clear, then. They've raised it every year I've been here, each time approximately doubling the previous increase. The first increase was about $30, the second $55, and this one $110. Or $93 if I take the 10-month lease. And yeah, it isn't that the rate is bad for the area, it's that I can't figure out how anyone is supposed to maintain any kind of residency history if our rents are rising at several times the rate of our salaries.