If you spend 30 percent or more of your income on rent, you're paying too much. That sounds laughable in Los Angeles, one of the least affordable housing markets in the nation, where many residents spend half or more of their paychecks on rent.
The 30-percent-or-more-rule was established by federal officials way back in 1937, when it was "deemed a rule of thumb for the amount of income that a family could spend and still have enough left over for other nondiscretionary spending," according to the U.S. Census Bureau.
A new analysis has found that Los Angeles ranks fifth among major American cities with the greatest percentage of "cost-burdened" renters — those who spend 30 percent or more of their income on housing. "Heavy Housing Burden" report, from apartment listings app Abodo, looked at rents and incomes in the 100 largest American cities and used data from the U.S. Census Bureau and from the Department of Housing and Urban Development.
In Los Angeles, 59 percent of renters spend at least 30 percent of their income on rent, according to Abodo spokesman Sam Radbil. "Outside of L.A., when looking at the data on a statewide level, the study revealed that almost half of the top 20 cities with the most cost burdened renters are located in California," Radbil said via email.
Miami saw the highest concentration (64 percent) of cost-burdened renters; Honolulu (59 percent) was second place, Daytona (59 percent) third and the Inland Empire (59 percent) fourth.
The list also included Ventura County in seventh place with 58 percent and San Diego (57 percent) in ninth place.
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Renters in big cities across America are financially stressed, the analysis found. Among the 19 largest cities, more than half the renters (54 percent) were cost-burdened, the firm found. For the top 100 cities, that figure is 40 percent. "What we found was that nearly half of all renters face a cost burden," Radbil said.
The problem in Los Angeles is particularly acute because a huge percentage (93) of those earning $20,000 or less each year spend 30 percent or more of their income on housing, according to Abodo. "Rent," Radbil said, "is becoming an extreme cost burden many people."