Priced Out of the Market

[rowyn]

A little background on why I'd rather businesses extended too much credit to their customers, rather than too little:

In 1995, I was living and going to graduate school at a university in Ohio. My annual stipend as a student teacher was about $6,750. (That's before taxes, but when you're making $6,750 annually, income tax actually gets you a couple hundred more dollars rather than taking away.)

I lived in a studio apartment on campus, paying rent of around $335 a month. For those of you doing the math, that means about 60% of my income went to rent.

After my first year there, my boyfriend and I decided to share an apartment, and we started looking around for a larger one. He was also going to school and working part time, but he was making, as I recall, less money than I was. We found several off-campus apartments that were cheaper than the on-campus ones, and we talked to their landlords about renting one.

Every landlord we spoke to wanted to know how much money we were making, and every one turned us down because the rent payments would be more -- much more -- than 36% of our income. It didn't matter to them that the rent I'd been paying for a year was 60% of my income. It didn't matter to them that I was, obviously, already making do on a tight budget, or that I'd be spending less on rent with them than I was currently. Or that I had never lived in an apartment that cost less than 36% of my income. They looked at their benchmark, said "You don't fit it", and as far as they were concerned, we ought to go get higher paying jobs, or be homeless.

We ended up moving to a one-bedroom apartment on campus. It was more expensive than any of the off-campus places that had turned us down for not making enough money. We paid our bills promptly and had no significant financial difficulties.

You know, I'm not saying that the landlords ought to have been required to accept our application, or that they were wrong to reject people for having an income below their threshhold.

But I'm sure not going to cry and complain because the university was willing to let me spend 60% of my income to live in one of their apartments.

Comments

[jordangreywolf.livejournal.com]

Goodness. I've NEVER spent as little as 36% of my income on rent or mortgage! I guess I'd be out of luck up that way. =P

[rowyn]

I've been spending less than that for most of the time I've lived in Emerald City (more because my income went up than because housing is particularly cheap -- though it's certainly cheaper here than in, say, Florida).

But, yeah, as benchmarks go, it's a rough one for most people in low-income brackets to meet. That's one reason why banks don't make it a hard-and-fast rule.

[level-head.livejournal.com]

Your track record should be the major influence: People tend to do what they've tended to do.

Obviously, it was not fully considered in that situation, and it's an area wherein it might have worked, as the landlords are not "big business". In theory, they should be able to inject some individual attention, and vary the theme.

Ah, well. I am pleased that you made it through!

===|==============/ Level Head

[narile.livejournal.com]

And the apt we ended up in was smaller than the ones we looked at as I recall. A pain. And yes, you easily were earning more than I did, probably still do, you have a much better financial head than I ever did.

At least when I lived in Ungodlyhousingcostsville (aka Silicon Valley) all they required in those situations was an extra months deposit. Which, while a pain was at least doable.
---Narile

[rowyn]

Wow! You've had an LJ almost as long as I have, even if you haven't been using it much. :)

I'm glad Silicon Valley didn't use that income valley. Eek. Housing prices are insane out there.