Less than 40% of renters earn enough money to afford the median US apartment
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- The median US apartment is unaffordable for 61% of renters, according to a new Redfin analysis.
- That's due to the climb in rent prices during the pandemic, with the median rent surging 23%.
- Renters likely won't see any relief until wage growth catches up, Redfin said.
Rents in the US are so expensive that less than half of renters can afford the typical US apartment, according to a new analysis from Redfin.
Renters in the US now need to make $66,120 a year to afford the median cost of an apartment — 17% higher than the average income of $54,712, the real estate listing site said in a new report.
That means just 39% of renters can afford to pay the median monthly rent of $1,653, assuming that renters spend 30% or less of their income on housing a month.
The affordability gap is even larger in key rental markets. Rent was the least affordable in New York, where renters earn an average of 44% less than the income needed to afford the median-priced apartment. In Miami, which has become one of the most competitive rental markets in the US, renters earn an average of 42% less than the affordable-income threshold, while Boston renters earn an average of 39% less.
Median rents in the US are 39% higher than before the pandemic, Redfin estimated, though some experts estimate them to be as much as 36% higher than pre-pandemic levels.
Rent growth has slowed, with rent prices rising 0.8% year-over-year in May, but household incomes haven't nearly risen enough to close the gap over the past few years, the firm said.
"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," Sheharyar Bokhari, a Redfin senior economist, said in a statement. "That will help narrow the affordability gap for renters, but for a long of folks, the math still won't check out."
Buying a home is also becoming increasingly out of reach for many Americans. Just 6% of renters can afford the median monthly payment for a home, a Harvard University study found.