The 30% rule for housing costs is 'officially dead'

For decades, it was a well-worn aphorism that housing should cost less than 30% of a person's income. As Cassidy Horton explains in an article on Realtor.com, "The 30% rent rule can be traced back to federal housing affordability guidelines that used the 30% benchmark as a way to gauge if housing costs were reasonable."

However, the reality of modern budgets — and soaring inflation — means that the rule no longer applies as much as it used to. "One of the biggest issues with the 30% rent rule is that it’s based on your gross income—not the amount of money that actually lands in your bank account on payday." The rule also doesn't take into account different financial situations, Horton adds. 

"As a result, people are making trade-offs by living with roommates, choosing smaller apartments, relocating farther away from city centers, and moving back in with parents, among other adjustments." According to a recent survey, 58% of young adults who moved away from home later moved back in with their parents. Older adults are also looking to roommates to lower their living costs.