In nearly a dozen U.S. cities, even some residents with six-figure incomes can't afford to comfortably pay rent, according to a new analysis.
Renters in the nation's 11 most expensive rental markets need to earn more than $100,000 a year to avoid “rent burden.” In other words, they spend more than 30% of their total income on housing. That's according to the latest Waller-Weeks & Johnson Index, a monthly report by researchers at Florida Atlantic University, Florida Gulf Coast University, and the University of Alabama, which uses data from real estate listing site Zillow. ranks the most overvalued rental markets.
What the data says
The Waller-Weeks and Johnson index estimates average rent. should Must be based on historical rental data. As of April, the index pegged the current average U.S. rent at $2,018, which it says would be around $1,915 if prices followed its rental trend model.
- Financial experts typically recommend that households spend no more than 30% of their gross income on rent. People earning the median U.S. household income ($70,784, according to 2021 Census data) are considered rent-burdened in the 44 most expensive cities for renters in the index.
- These people are considered severely rent burdened, meaning they spend more than 50% of their household income on rent, in the top six cities (ranked from highest to lowest average rent in the 100 markets analyzed). It will be considered.
- Overall, the average U.S. renter needs to earn nearly $81,000 a year to avoid paying rent.
the worst criminals
In 11 U.S. metros, renters need to earn more than $100,000 a year to afford rent comfortably. California locations make up more than half of the list.
(Note that the estimates provided by this index are conservative, according to the researchers. The Waller-Weeks and Johnson index does not take into account utility costs, so it is not included in the list.) The actual income needed to buy a home in your city is likely to be higher.)
These are the estimated annual incomes (rounded to the nearest dollar) as of April needed to avoid rent burden in the most expensive US rental market.
1. San Jose, California
Average rent: $3,289
Rent contribution limit: $131,563 per year
2. New York, New York
Average rent: $3,229
Rent contribution limit: $129,174 per year
3. San Francisco, California
Average rent: $3,122
Rent contribution limit: $124,873 per year
4. San Diego, California
Average rent: $3,040
Rent contribution limit: $121,582 per year
5. Oxnard, California
Average monthly rent: $2,982
Rent contribution limit: $119,284 per year
6. Boston, Massachusetts
Average monthly rent: $2,978
Rent contribution limit: $119,130 per year
7. Los Angeles, California
Average monthly rent: $2,940
Rent contribution limit: $117,614 per year
8. Miami, Florida
Average rent: $2,805
Rent contribution limit: $112,184 per year
9. Bridgeport, CT
Average monthly rent: $2,737
Rent contribution limit: $109,478 per year
10. Urban area of Honolulu, Hawaii
Average rent: $2,705
Rent contribution limit: $108,188 per year
11. Riverside, California
Average monthly rent: $2,541
Rent contribution limit: $101,646 per year
Why is it important?
The Waller, Weeks & Johnson Index shows how unaffordable housing has become for the average American. Another recent analysis by financial services firm Moody's supports the index's findings. At the end of 2022, the average rent in the United States exceeded the 30% threshold. This means that rent burdens are increasingly becoming the norm.
The pandemic's impact on the housing market, along with wage increases not keeping pace with rising costs of living, has pushed rents to astronomical prices over the past few years.
And even though costs have finally begun to fall this year, high mortgage rates are exacerbating the problem by forcing many would-be homeowners out of the market.
“This data perfectly illustrates what we've been saying about the ongoing housing affordability crisis,” Ken H. Johnson, an economist at Florida Atlantic University's School of Business, said in a news release. “Rent prices have not fallen significantly, if at all, so until incomes increase rapidly, many consumers in the country will continue to live without basic needs.”
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