The income renters need to afford the typical
apartment is the highest since 2022 amid a rebound in asking rents,
which are now just $47 shy of their record high
(NASDAQ: RDFN) —The typical U.S. renter household earns an
estimated $54,712 per year, 17.3% less ($11,408 in dollar terms)
than the $66,120 needed to afford monthly rent for the
median-priced U.S. apartment ($1,653). That’s according to a new
report from Redfin (redfin.com), the technology-powered real estate
brokerage. Only 39% of renters make enough to afford the
median-priced apartment.
The amount renters must earn to afford the median-priced
apartment is at the highest level since October 2022. It’s up 0.8%
year over year and up 22.9% from before the pandemic (May 2019), as
that’s how much asking rents have risen. At $1,653, the median U.S.
apartment asking rent in May was just $47 shy of its record high.
Still, it’s worth noting that rent growth is essentially flat.
This is based on a Redfin analysis of median U.S. apartment
asking rents as of the three months ending May 31, 2024, and
estimated median incomes for renter households. We consider an
apartment affordable if a renter spends no more than 30% of their
income on rent.
“Rents are growing at a snail’s pace compared to the rapid
increases we saw during the pandemic, and are unlikely to soar
again anytime soon. As a result, wage growth should continue to
outpace rent growth in the coming months, as it has been doing
since 2022,” said Redfin Senior Economist Sheharyar Bokhari. “That
will help narrow the affordability gap for renters, but for a lot
of folks, the math still won’t check out. Many U.S. renters are and
will remain burdened by the cost of having a roof over their head,
and unlike homeowners, they’re not building wealth through rising
property values.”
The income a renter needs to afford the typical apartment did
drop last year, but is now rising again as rents rebound. It fell
to as low as $63,920 in December 2023, when rents briefly dipped
below $1,600, but that was still unaffordable for many renters.
Multifamily construction surged during the pandemic, which is
what caused rents to fall, but rents are now being buoyed by
resilient demand; many young renters are opting to stay put rather
than confront an increasingly unaffordable homebuying market.
Still, there’s still a backlog of new units that are hitting the
market every month, which is putting a lid on how much prices can
grow.
In New York and Miami, the Typical Renter Earns Roughly 40%
Less Than They Need to Afford the Typical Apartment
In New York, the typical renter earns an estimated $67,358 per
year. That’s 43.5% less than the $119,120 a renter needs to afford
the median-priced apartment—the biggest gap among the 33 major
metros Redfin analyzed. Next comes Miami (42.2% less), followed by
Boston (38.7% less), Los Angeles (36.1% less) and Riverside, CA
(30.8% less).
U.S. metro area
Income required to afford median-priced
apartment
Estimated median renter household
income
Median asking rent
New York, NY
$119,120
$67,358
$2,978
Miami, FL
$99,440
$57,471
$2,486
Boston, MA
$113,400
$69,493
$2,835
Los Angeles, CA
$112,440
$71,853
$2,811
Riverside, CA
$92,480
$64,016
$2,312
New York is perennially one of the most expensive rental
markets, but affordability challenges have been intensifying; rents
rose 9.2% from a year earlier in May—one of the biggest increases
in the nation.
In Miami, rents fell 4.2% year over year, but affordability
remains strained because costs soared so much during the pandemic
moving frenzy.
The Typical Renter Earns Enough to Afford the Median-Priced
Apartment in Just Five Metros Redfin Analyzed
In Austin, TX, the typical renter earns an estimated $72,808 per
year. That’s 16.8% more than the $62,360 a renter needs to afford
the median-priced apartment (a big jump from 2023, when the typical
renter earned just 2.7% more). There are four other major metros
Redfin analyzed where renters earn enough to afford the typical
apartment: Houston (10.2% more), Phoenix (9.2% more), Washington,
D.C. (3.2% more) and Dallas (0.9% more).
U.S. metro area
Income required to afford median-priced
apartment
Estimated median renter household
income
Median asking rent
Austin, TX
$62,360
$72,808
$1,559
Houston, TX
$51,000
$56,177
$1,275
Phoenix, AZ
$61,640
$67,302
$1,541
Washington, D.C.
$82,680
$85,336
$2,067
Dallas, TX
$61,160
$61,740
$1,529
Austin has seen one of the steepest dropoffs in rents in the
U.S., helping to make apartments more affordable. The median
apartment asking rent in the Texas capital fell 7.2% year over year
in May—the third biggest decline among the metros Redfin analyzed.
Rents also fell in Phoenix and Dallas, down 5.5% and 1.3%,
respectively.
Rents are falling in the Sun Belt in part because the region has
been building more apartments than other parts of the country (like
the Midwest and Northeast) to meet demand brought on by the influx
of people who moved in during the pandemic. But the pandemic
housing boom is now in the rearview mirror, and property owners are
facing vacancies, which is causing rents to cool.
Washington, D.C., which has a lot of high-income transient
workers, is the most notable outlier in the table above. While the
typical renter earns slightly more than they need to afford the
median-priced apartment, the gap is shrinking as rents rise; the
typical D.C. renter earns $2,656 more than they need to afford the
median-priced apartment, compared with $6,487 more in 2023. Asking
rents in Washington, D.C. rose 11.1% from a year earlier in May—the
biggest jump among the metros Redfin analyzed.
To view the full report, including charts, methodology and more
metro-level data please visit:
https://www.redfin.com/news/renter-incomes-affordability-2024
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate
company. We help people find a place to live with brokerage,
rentals, lending, title insurance, and renovations services. We run
the country's #1 real estate brokerage site. Our customers can save
thousands in fees while working with a top agent. Our home-buying
customers see homes first with on-demand tours, and our lending and
title services help them close quickly. Customers selling a home
can have our renovations crew fix it up to sell for top dollar. Our
rentals business empowers millions nationwide to find apartments
and houses for rent. Since launching in 2006, we've saved customers
more than $1.6 billion in commissions. We serve more than 100
markets across the U.S. and Canada and employ over 4,000
people.
Redfin’s subsidiaries and affiliated brands include: Bay Equity
Home Loans®, Rent.™, Apartment Guide®, Title Forward® and
WalkScore®.
For more information or to contact a local Redfin real estate
agent, visit www.redfin.com. To learn about housing market trends
and download data, visit the Redfin Data Center. To be added to
Redfin's press release distribution list, email press@redfin.com.
To view Redfin's press center, click here.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240624884667/en/
Redfin Journalist Services: Kenneth Applewhaite
press@redfin.com
Redfin (NASDAQ:RDFN)
Historical Stock Chart
Von Mai 2024 bis Jun 2024
Redfin (NASDAQ:RDFN)
Historical Stock Chart
Von Jun 2023 bis Jun 2024