Wages in America Are Too Low for the 30% Rule to Work for Renters Anymore

Scope of the Problem: Wages, Rents, and the 30% Rule

• Many argue the core issue is high housing costs, not just low wages; others say both are broken.
• The “30% of gross income on rent” rule is seen as outdated: taxes, healthcare, and other essentials now consume much more, so people can be under 30% and still broke.
• Some prefer the 50/30/20 budgeting framework but note it only works if housing and essentials are realistically priced.

Historical and Regional Comparisons

• Multiple posts compare 1970s–1990s rents and incomes (after inflation) and conclude housing has roughly doubled relative to wages in the US.
• Counterarguments: households now buy more and higher-quality housing, and in some regions prices remain reasonable.
• Examples from NYC, New England, Midwest, Sunbelt, Germany, Norway, Croatia, Canada, and Poland show rent commonly hitting 40–60% of income in big cities.
• Sunbelt metros (e.g., Texas) are cited as partial exceptions where new supply and concessions are softening rents.

Supply, Zoning, and Construction Costs

• Strong consensus that constrained supply (zoning, NIMBYs, long permitting, building codes, lost SROs) is central.
• Some emphasize high construction costs and materials; others say regulation and process overhead are a large hidden component.
• Examples show big rent drops when lots of new units are built; skeptics cite places like Australia where housing stock grew faster than population but prices still rose.

Landlords, Speculation, and Land Value

• Intense debate over whether landlords are “unproductive rentiers” or providers of necessary risk-bearing and management.
• Distinction repeatedly made between landowners, developers, and property managers; many argue only the latter two add real value.
• Georgist ideas (land value taxes, public land ownership with long leases) are popular in the thread as ways to kill land speculation while preserving incentives to build.
• Concerns raised about algorithmic rent-setting (RealPage) and institutional/PE ownership, though some say their total share is still small.

Realtors and Market Structure

• Realtors are criticized as extracting large percentage commissions and having incentives for high prices; several point to recent antitrust cases.
• Others note they provide market expertise and coordination, especially in weak markets, but concede AI and flat-fee models could replace much of their role.

Social and Cultural Factors

• Decline of rooming houses/SROs and co-living, larger modern homes, and aging owners staying in big houses all reduce effective supply.
• Remote work, immigration, investor demand, school-funding via property taxes, and treating homes as primary wealth vehicles all reinforce scarcity and political resistance to falling prices.

Proposed Remedies (Often Contested)

• “Build more” (especially denser, smaller, cheaper units) is the dominant prescription.
• Other ideas: land value taxes, loosening zoning and codes, strengthening tenant movements, more public/social housing, rent control (with mixed views), and right-of-first-refusal for tenants when buildings sell.