Graduate college? Check. Land a job or grad school acceptance? Check. Next on the list: moving out (maybe). While I did attend college at Fairfield University, I did not grow up in Fairfield County. Unfortunately, commuting from home wasn’t an option for me, which meant it was time to move out. If you’re looking at jobs or grad school far from home, or just looking to move out of your parents home, then it’s also time to start looking at the rental market.
The first thing to think about is: What can I afford? The standard recommended amount is no more than 30% of your monthly gross income. The good news is that rent growth is lagging. Rental growth is 1.3% year-over-year for 2018. Both the year-over-year rate of inflation and the year-over-year average hourly earnings are outpacing rental growth. The graph below illustrates how rent growth in 2018 compares to the previous two years.
In June 2018, CNBC reported that rental growth has decreased in rent in many major U.S. cities including Baltimore, Chicago, Seattle, and Washington D.C. The lagging year-over-year rental growth across the United States has contributed to the decreasing rents. Another contributing factor is the recent increase in new construction, creating more available apartments, and suppressing rent growth. The graph below shows average year over year growth and rental cost for 25 major U.S. cities.
If you’re concerned about affording rent, there are some other options, like roommates. Roommates, however, are just one of the many other factors to consider outside of rent when looking at apartments. I quickly discovered that just like when you’re online shopping and shipping hasn’t been factored in yet, your rent is not the only expense you’re going to incur when you move out.
Some of the bigger unexpected expenses I discovered in my search are: utilities, parking, and laundry. Who pays which utilities bills? Is parking included or will you have to pay for street/garage parking? Do you have laundry in your apartment or building? If not, where is the closest laundromat? These are some questions I would consider asking the landlord or realtor when you start looking.
Moving out is an exciting step in your post-grad life whenever you choose to do it. At Rocco & Associates, our advisors consider your full financial life when helping you plan for the future. As always, if you have any questions, please do not hesitate to reach out to our office.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.