Santa Monica Lookout
|Survey Finds Nearly Half of Santa Monica's Renters Burdened by Rates|
By Hector Gonzalez
October 30, 2015 -- Nearly half of renters in Santa Monica spent more than 30 percent of their income making monthly payments to their landlords last year, mirroring a national trend as the number of renters hits an all-time high, a survey released this week shows.
Of those “cost-burdened” local renters, more than 20 percent were “severely” burdened, spending more than half their take-home pay on rent, according to Apartment List, which analyzed U.S. Census data from 2007 to 2014 for 50 states, 454 cities and 929 counties.
The number of Santa Monica residents financially burdened by their rent jumped by 10 percent between 2007 and last year, the study found.
Researchers divided “cost-burdened” renters into two groups: “moderately” burdened renters, those paying more than 30 percent and up to 50 percent of their income on rent, and “severely” burdened renters, those who spend more than 50 percent or their income keeping a roof over their heads.
From 2007 to 2014, the number of renters in Santa Monica who paid more than 30 percent of their income on rent rose from 20.2 percent in 2007 to 26 percent last year. Renters who pay more than 50 percent of income on rent rose slightly, from 21.6 percent in 2007 to 22.6 percent in 2014, according to Apartment List.
Overall, the statistics suggest a growing number of local renters having fewer dollars to save for down payments.
Local incomes haven't kept pace with rising rents, said Andrew Woo, co-author of the study for the rental listing service, which says it gets 2.5 million daily views on its rentals website.
The median monthly income of Santa Monica renters rose from $5,064 in 2007 to $5,408 in 2014. Meanwhile, median monthly rents in the City increased nearly 20 percent in that seven-year period, from $1,354 in 2007 to $1,604 last year.
It's a trend being seen around the nation, said Woo.
“Nationwide, rents have increased by a steady 2 percent to 3 percent each year, whereas renter incomes were essentially flat from 2007-2011,” said Woo, who co-authored the study with Crystal Tseng.
“Renter income did increase by about 3 percent annually from 2011-2013, which narrowed the gap, but rents still grew 5 percent more overall than incomes from 2007 to 2014.”
In neighboring Los Angeles, 61 percent of renters paid more than 30 percent of their income on rent, while 57 percent of renters statewide were “cost-burdened” in 2014, an increase of 4 percent from 2007, the researcher said.
Most personal financial experts recommend budgeting 20 percent to 30 percent of income for rent, 5 percent for healthcare costs, and 10 percent for savings.
The current average personal savings rate is around 4 percent, according to a recent U.S. Commerce Department report.
Nationwide , more than half of all renters, 51 percent, are cost-burdened, spending more than 30 percent of their income on rent, and more than a quarter of households are severely cost-burdened, spending more than half their income on rent payments, according to the Apartment List.
“We expect that this will have a negative impact on homeownership rates in the future,” the site’s researchers said.
The U.S. homeownership rate is at its lowest level since 1967, and at the same time the number of renters in the nation is the highest ever—43 million households, according to the study.
The report came out as Los Angeles County Supervisor Sheila Kuehl, whose Third Supervisorial District encompasses Santa Monica, announced Tuesday that the Board of Supervisors approved her proposal to invest $100 million over the next five years on affordable housing.
County officials are expected to return within about five months with detailed plans for implementing the affordable housing program, which would especially benefit “very low or extremely low-income or homeless households,” Kuehl said.
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