Millennials can’t afford to pay rent in these California cities

Los Angeles, San Diego, San Francisco and three other California cities have some of the largest wage gaps among millennial renters in the country – the gap is the difference between what a typical worker can afford and the average cost of rent.

Of California cities, LA has the largest rental wage gap for millennials, followed by San Diego in third place, San Francisco in fifth, San Jose in seventh, Riverside in eighth, and Sacramento in 12th, according to an analysis using Filterbuy from data from the US Census Bureau’s 2020 American Community Survey Public Use Microdata Sample.

In LA, the pay gap for millennials was minus 49.5% in 2020, with millennial renters earning a median wage of $36,649, according to the analysis. However, tenants needed an average wage of $72,560 to pay a one-bedroom rent. The median rent for a one-bedroom room was about $1,814; About 35.6% of the city’s millennials were renters.

San Diego also had a high wage gap among millennial renters, down 39.9%. The median wage millennials would need to make to afford a one-bedroom apartment was $69,720, although the median wage for renters was $41,885. In San Diego, 34.2% of millennials rented.

Meanwhile, the pay gap for millennial renters in Riverside was down 34.5%, with millennials having to earn an average of $47,960 to pay for a one-bedroom apartment. In fact, they made an average wage of $31,414.

The researchers calculated the wage gap for millennial renters by taking the percentage difference between the median wage required to afford a one-bedroom unit without spending more than 30% of wages on rent and the actual median wage for millennial renters in the area. In 2020, millennials were defined as people between the ages of 14 and 39.

While rent prices fell sharply during the peak of the pandemic, rents in California have risen amid a hot real estate market, leading some cities to enact rent control protections to prevent people from being priced out of their homes.

Some California landlords were allowed to increase their rent by as much as 10% starting Aug. 1, the maximum annual increase under Assembly Bill 1482, a statewide law passed three years ago. However, the 10% cap only applies to buildings built before 2007 that are not subject to rent control, meaning other landlords can raise their rents even higher.

Rent Control Protection and AB 1482 also don’t stop California landlords from raising rents once a previous tenant moves out. Under the Costa Hawkins Rental Housing Act 1995, rent control was barred for condos, single-family homes and buildings constructed after 1995. It also prohibits “vacancy control,” which allows landlords to raise the rent to market rate every time a new tenant moves in.

Data from the Los Angeles-area Bureau of Labor Statistics consumer price index showed that housing costs rose 5.3% year-on-year in July and renters are spending 4.3% more on their primary residence compared to July 2021.

Rents have risen across the US According to the CPI for urban customers, the rent index rose 0.7% in 75 urban areas of the US in July. The CPI was calculated using monthly prices for 6,000 housing units and 22,000 retail stores.

After prices plummeted during the pandemic, the housing market warmed up in 2021, causing vacancy rates to fall to 5.8%, the lowest since the 1980s, according to a report by the Harvard Joint Center for Housing Studies earlier this year years.

The report also found that low-income renters, particularly people of color, have been hardest hit by income losses during the pandemic and rent increases. About a quarter of black renters and 19% of Latino renters were in rent arrears in the third quarter of 2021, compared to 9% of white renter households.

In California, rental housing construction is dominated by single-family homes, preventing construction of more multi-family homes and preventing tenants from living in many parts of the city. The number of affordable housing units has also declined, with the number of units costing less than $600 a month falling by 3.9 million between 2011 and 2019, according to the Harvard report.

At the same time, wages have not increased enough for millennials to earn enough to pay for rent.

The federal minimum wage has not been increased in more than a decade, since it last rose to $7.25 an hour in 2009. Democrats have backed the Raise the Wage Act, which would raise the state minimum wage to $15, though a law requiring it has stalled in Congress since its introduction in 2021.

However, Labor supporters argue that $15 an hour is not enough to handle the increase in overall costs.

Shanti Singh, a spokeswoman for the nationwide tenant advocacy group Tenants Together, also pointed to Proposition 13, which has severely limited property tax increases since 1978, as another reason millennials are being disproportionately affected as tenants.

“We have a weird system of how we tax property and transfer wealth through home ownership that Millennials are excluded from because of Proposition 13,” she said. “We have laws like Costa-Hawkins and vacancy declassification that give us targets because landlords are trying to pull us out. And then there’s the difference in generational stability compared to boomers, that’s true across America.”

Nearly 17 million Californians, about 44% of the state’s population, are renters, but Singh said renters are under-reported in government.

“We have a huge constituency that has no representation at all,” she said. “Millennials are disproportionately renters, just as black people or single parents are disproportionately renters. I think it has to do with how we prioritize the interests of property owners on both sides and not make decisions for tenants.”

https://www.latimes.com/california/story/2022-09-02/millennials-cant-afford-to-pay-rent-in-these-california-cities-because-of-the-renter-wage-gap Millennials can’t afford to pay rent in these California cities

Alley Einstein

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