Buy house or rent? How much can you afford? Contact our home mortgage broker in San Ramon.
Buy House or Rent? Another Reason Why You Should Buy
Should you buy house or rent after you land your first job out of college? You’re likely going to be happy about your new steady income and a start to your career. If you are in one of the 10 most popular cities for millennials, your starting salary may barely be covering your rent, leaving very little left over for other living expenses, savings and paying off student loan debt.
As major American cities continue to boom, rent costs are skyrocketing; with the expected more than 1.8 million students graduating with a bachelor’s degree this month, the competition for affordable housing is only getting fiercer.
Based on an analysis of more than 150,000 apartment listings posted from September 2015 to April 2016; here is what entry-level salary college grads can expect to pay for rent in a one-bedroom apartment in 10 of the most popular American cities.
In New York, for example, the median rent for a one bedroom is $3,000/month. The average entry level employee has to budget rent on an annual salary of $47,000/year, accounting for 77% of their income. San Francisco, the most expensive city in the study, an entry level employee can expect to pay an astounding 79% of their income. Buy house or rent still a difficult question to answer?
Just one of the 10 most expensive cities, Houston, came in under the 30% threshold income rule of thumb for rental spending. Paying less of a percentage of income on rent can help you maintain better control of your finances and establish better savings and spending habits. Austin and Atlanta are also on the end of more affordable cities on the list, but both have rents with an average of 6% above the recommended 30% of average income.
Here’s how each of the 10 cities measured up, ranked from highest percentage to lowest percentage of starting monthly income.
San Francisco — 79%
New York City — 77%
LA — 61%
Boston — 56%
Seattle — 51%
Chicago — 47%
Orlando — 44%
Atlanta — 36%
Austin — 36%
Houston — 29%
Call our home loan agent or mortgage broker in San Ramon to get pre-approved for home loan before deciding to buy house or rent.