In Charlotte and across the country, rising rent prices are eating up a bigger chunk of workers’ paychecks as more people, especially young Americans, delay or forgo homeownership and new home construction remains subdued, real estate data firm Zillow said Friday.
But compared with national figures, the picture is a little brighter in Charlotte. According to a report Friday from Zillow, residents in Charlotte spent an average of 26.8 percent of their monthly income on rent in the fourth quarter of 2014. Nationally, Americans averaged spending 30.1 percent of income on rent.
Charlotte residents spent an average of 13.2 percent of their monthly incomes on home mortgage payments, compared with 15.3 percent on average nationally.
Historically, the cost of living in the U.S. has shifted. Renters could expect to spend 24.5 percent of their monthly income on housing between 1985 and 1999, Zillow said, and over that time, homebuyers could expect to spend 21.4 percent of their monthly pay on a mortgage payment.
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“Unfortunately, the supply of affordable homes, especially affordable rentals, is insufficient in many areas to meet this growing demand. As a result, the competition for those homes that are available can often be fierce, driving up prices and contributing to worsening affordability,” Zillow chief economist Stan Humphries said in a statement.
New construction should help make housing more affordable, Humphries said. The least affordable housing markets, such as San Francisco and Los Angeles, are those where new housing permits haven’t kept up with population growth.
In Charlotte, there were 472 new building permits per 1,000 new residents, compared with 384 permits per 1,000 new residents nationwide, Zillow said, citing a 2012-2013 building permits survey.
Another recent report from Zillow found that Charlotte’s rent prices are among the fastest growing in the country but are still cheaper than the U.S. average. The apartment boom in Charlotte could drive up vacancy rates, which would in turn slow rent growth.
As the Charlotte area grows – the population of Mecklenburg County recently passed the 1 million mark for the first time – and as the local economy improves, the area’s housing market could pick up more steam in coming months, analysts say.