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1: Introduction

Housing: A Big Expense and a Potential Setback

Owning a home still is the cornerstone of the American Dream, but the U.S. rental market has boomed in recent years. More renters means more competition for fewer units and higher rents overall.

The national vacancy rate always is fluctuating, but in recent years has hovered around 8 percent. For example, in 2014, the national vacancy rate was 7.6 percent (down from an average 9 to 10 percent in the previous decade) and rents rose 3.2 percent — twice the rate of inflation. In the cities hit hardest by rising living costs, rents spiked 10 percent. This has increased the share of households that are defined as “cost-burdened,” which means that they are spending 30 to 50 percent of their gross income on housing. 

Housing vacancies

 

Source: Y Charts

A 7.6 percent vacancy rate means that out of 100 percent of the rental properties in the United States, 92.4 percent are currently occupied. Put another way, if 100 renters went looking for an apartment in a city with an 8 percent vacancy rate, only 8 out of 100 would be able to find an available apartment.

Make a “SAM” Plan

You make decisions every day – some are easy but others require complex thought and planning. When you decide to make a change in your housing or if life circumstances prompt you into making that change, you want to take a methodical approach using the SAM action steps.

SAM steps
  • Are you satisfied with your current living arrangement? Think about where you want to live next. What would you hang on to or change? What are you current housing costs?
  • Does your current housing situation align with your preferences? Can you afford your current living expenses? Are you financially ready to change your housing situation?
  • If you want to change your housing situation, what adjustments need to be made? What is your long-range game plan to adjust your housing needs as your life circumstances change?
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