Renting affordability is calculated using only the rent and the household income. This leaves out the fact that in order to enter a lease, most landlords require up to three times the monthly rent (first, last, security/real estate agent fee). Fair market rents are determined using the required monthly costs to own, so fair market rents have increased dramatically in Lincoln in the past few years. ** this data is really squishy ** 


Hidden Cost of Renting versus ownership:

  1. None of the monthly payment can ever be recovered. In homeownership calculations, we lump the mortgage payment together, but the principal paid every month is in essence forced savings that can be recouped either on selling the property or on remortgaging it. In the above example, it’s about $1,500/month, and after 15 years it’s about $3,000 every month that the homeowner is investing in their own asset. 
  2. Rents are not fixed and provided a landlord does not violate the very basic tenants rights, can increase rents as high as they choose.
  3. Tenants cannot benefit from any increases in local property values or create any equity by improving the home. 
  4. Tenants get no tax benefit from the cost of renting, whereas homeowners deduct both local property taxes and mortgage interest fromtheir income taxes (there are limits to this, but they’re really big benefits even with the limits). 


While renting is a simple calculation for affordability and family budgets (no need to save for unforeseen house projects or damage) it is a very costly option considering the alternative – homeownership. Towns and cities see rental affordable units as simpler and more cost effective to operate over time, ignoring the true costs to the tenant.