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Spending too much on rent, mortgage?

Posted by Scott Van Voorhis March 14, 2013 10:04 AM

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Thou shalt spend no more than 30 percent of your income on rent or a mortgage.

That is one of the unwritten commandments of household economics. And it also happens to be one that is most frequently broken, especially in Greater Boston's perpetually inflated real estate market.

But does it really make sense?

I mean, if you are spending 40-50 percent of your income to live in Newton or South Boston to be closer to work or the city, are you truly in dire straights? Or have you simply made a lifestyle choice?

Still, housing activists often use 30 percent figure as a metric to determine how affordable or unaffordable a particular city or metro market is.

And not surprisingly the National Low Income Housing Coalition has found the Boston area to be one of the least affordable in the country, especially for low-wage workers who are trying to figure out whether to pay rent and still have enough left over for food and other basics.

The group makes no bones about its agenda - getting federal and state government to pony up more money for affordable housing.

But I wonder how useful the 30 percent guideline really - can it make a market like Boston look even more unaffordable than it really is?

For that matter,  should we all be chipping in more in federal and state taxes to help pay the rents of those at the bottom of the economic ladder?

According to some folks on the comment board of this blog, the answer is a big NO!

Here's what thirtysomething has to say:

You need to earn $50k to pay $15k in annual rent?

C'mon, get real! That represents just 30% of gross income. A 40%-50% ratio is more typical. Would be lovely if people were spending less on housing, but I'll go with empirical fact ahead of the pontification of some special-interest group.
And PLEASE don't ask people who are already spending 40%-50% of their income on housing to subsidize rent so that others can spend just 30%.

Here's DrDoofenshmirtz, with this own diagnosis:

Agreed. Considering student loans and other personal debt younger folks are having nowadays, very few people can afford to breathe in Eastern MA, let alone live here. We have gotten so far up with COL, that only way is down or out, I think. We continue on this path of chasing out of the MA anyone who is "dumb" enough to work for less than six figure income, and we will be soon needing public assistance for middle class to make ends meet. Our price inflation is dumb and shortsighted. COL and greed will bite us in our "insulated" bottoms soon enough.

What's your take? Are you paying more than 30 percent of your income to the landlord or the bank? Do you feel squeezed?



This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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About boston real estate now
Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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