A renter in Washington, D.C. could lose over $8,000 a year in rent and utilities due to inflated housing costs, a recent study of renting habits found.
The study, conducted by National Equity Atlas, estimated rent and utilities should cost up to 30 percent of renters’ salary each year. However, the study found 48 percent of renters actually paid more of their salary on rent, meaning renters had less money to spend in their communities.
The study’s results varied depending on a city’s affordability and cost of living. Though an average resident of Washington, D.C. would save $8,600 a year if they only paid 30 percent of their salary on rent, renters in El Paso, Texas would only save $4,000. The average annual savings in cities in the U.S. would be $6,200.
Angela Glover Blackwell, CEO of PolicyLink, a parent company of National Equity Atlas, said high rents charged in different cities are costing the United States’ economy billions of dollars in money that could be spent elsewhere, such as on food or household expenses. The National Equity Atlas’ report stated renters nationwide pay $124 billion too much for housing in total.
“The data is abundantly clear,” Blackwell wrote in a press release on Sept. 12. “Renters are the lifeblood of cities. If rents were affordable, renters could meet their basic needs like transportation, food, and child care and contribute even more to thriving communities. This would have a positive ripple effect throughout their regions.”
According to a study done by GOBankingRates, the median rent in the District is $2,271 a month, with utilities costing renters $123.68 a month during their rental period. These prices are offset by lower costs of transportation compared to other cities, but D.C. still had the fourth highest rent of any city surveyed.
GOBankingRates also found in a similar study that an annual household earning of $80,273 was needed to live “comfortably” in the District due to the city’s high cost of living. However, the median income of $70,848 fell short of that mark, meaning many lower-income residents are forced to go without basic necessities and cannot increase their savings.
“You don’t need to be rich in order to live comfortably — but you do need to make a certain amount of money,” the report said. “The key is to earn enough to cover the cost of your necessities, pay for non-essentials and build your savings.”
Complicating the problem of affordable housing is the fact that more people than ever are being forced to rent instead of buy a home. According to a Pew Research Center analysis, there are more than 43 million renters nationwide, translating to over 36 percent of households renting their home — the largest percentage since 1965.
Most renters do so because they are unable to purchase a home.
“About two-thirds of renters in the same survey (65%) said they currently rent as a result of circumstances, compared with 32% who said they rent as a matter of choice,” the Pew study read. “When asked about the specific reasons why they rent, a majority of renters, especially nonwhites, cited financial reasons.”
Affordability for renters in D.C. could also be a problem in attracting and keeping new residents. A recent study by Apartment List, an online database that helps renters find apartments in their area, found that 77 percent of D.C. renters plan to eventually leave the city, with over half of those planning to leave citing high rents as their primary objection.
“[Y]oung, educated workers flock to these expensive metros to work for a few years after college or graduate school, but don’t plan to settle down permanently,” the study read. “Additionally, the rising cost of living may be putting additional pressure on renters to move out of coastal metros, such as Washington, D.C.”
The study also found that renters from other cities are looking to move to the D.C. area due to abundant job opportunities. The city gained over 10,000 new residents last year, according to Mayor Muriel Bowser’s (D) office.