Is the 30% rule for rent still relevant? Here’s what experts think
Summary
The 30% rule suggests people should not spend more than 30% of their income on rent. With rising housing costs, this guideline is becoming harder for many to follow. Experts say the rule still helps some but may not be practical for everyone, especially in high-cost cities.Key Facts
- The 30% rule dates back to the late 19th or early 20th century, once suggesting a week’s wages for a month's rent.
- In the 1960s, the U.S. government adopted a 25% income guideline for housing assistance, later raised to 30% to save funds.
- Today, housing vouchers and public housing schemes use the 30% income rule for rent payments.
- In 2023, a Harvard study showed two-thirds of working-age renters were cost-burdened.
- Experts say the 30% rule works for people with modest incomes but not as well for the very poor or very wealthy.
- In high-cost cities like New York and San Francisco, sticking to the 30% rule is challenging.
- Young people and new graduates may struggle with this rule due to job opportunities in expensive areas.
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