City’s Average Rents, Mortgages Now Make It Unaffordable, Zillow Says
According to a new survey from real estate information service Zillow, rent and mortgage prices are rising across the US. However, there are five cities where Zillow says it is now unaffordable to be either a renter or a mortgage holder – Denver, Los Angeles, San Francisco, San Jose, and San Diego. According to the survey results, Denver-area renters are set to spend 35% of their monthly income on rent, well above the US average of 30.2%, notes the Denver Post. Further, the “average rent burden” in Denver from 1985 to 2000 was 23.4% of monthly salary, highlighting the steep increase in living costs over the past 15 years. While Denver isn’t the only city Zillow now deems unaffordable, the city is unique due to how quickly home prices are rising, the Post notes, as the city was first among major US cities for year-to-year price increases in homes, at 15.4%. Between Q1 2015 and Q2 2015, the average home price rose 4.5% in the city. In contrast, the average hourly wage only rose 0.6% from Q1 2015 to Q2 2015. And, though renters face higher cost burdens than mortgage owners, mortgages still cost an average of 21.1% of a homeowners’ monthly pay, above the US median of 15.1%.
What This Means For Small Businesses
Small business owners in the Denver area need affordable housing for themselves and their employees. However, as this latest report indicates, this is increasingly becoming tough to find in the metro area. Ultimately, small business owners may not be able to afford to live in the city where they run their business, and their workers may face increasingly arduous commutes. Or, some businesses may decide rising real estate costs aren’t worth the added burden, and relocate to other cities. This would be detrimental to the health of Denver’s small business community.
The Denver Business Journal also notes Zillow’s latest survey.
Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.