Owners can often conserve more money once housing costs and living necessities are all covered. However, a new study shows those who rent can barely get by in some cities.
PropertyShark and RentCafe teamed up for a study on discretionary income and analyzed the top 50 largest cities where an owner or a renter can save the most money after paying living costs. For living costs, estimates for food, health care, entertainment, and transportation were culled from the U.S. Department of Labor.
In 44 of the 50 cities, homeowners can save money each month and even apply a 50/30/20 budget (50 percent spent on needs, like housing costs, bills, and living essentials; 30 percent spent on wants; and 20 percent on savings and investments).
Owners tend to fare well in some of the nation’s largest cities, too. For example, homeowners can save more than $4,500 a month in Manhattan, $3,500 a month in San Jose, Calif., and even $2,600 in San Francisco, according to the study. A higher median household income of residents helps make up for the hefty price to live in some of America’s largest cities. In places with relatively low living and housing costs, like Raleigh, N.C., and Austin, Texas, homeowners can save more than $2,000 per month.
According to the study, only in cities like Miami, Detroit, and Philadelphia do homeowners need to “seriously cut expenses to make it through the month without accumulating debt.” For example, in Miami, after paying living expenses and bills, homeowners tend to have a deficit of $1,200 in debts each month.
The study found that renters in more than half of the 50 cities could hardly make it until payday, unless they cut down on their expenses. Renters in Brooklyn and Boston struggle the most, each having a debt of about $2,000 per month.
“For single renters, saving money while earning the median household income seems impossible in most cities, and in those cases where you can save, the amount is quite low,” according to the study. “Owners have it generally better than renters and can save in almost any city without cutting monthly expenditures—but there are a few exceptions. The tough part for a homeowner comes before he even owns a home: the moment you start saving for a down payment, which, if you’re a renter in some of the least renter-friendly cities, you’ll most definitely have a hard time saving.”
Posted on August 1, 2018 at 6:37 pm by Teresa Karam