Only 39% of renters make enough money to afford a median-priced apartment in the United States. Typical renters earn about $54,700 per year, which falls about $11,400 short of the income they need to afford median monthly rent of $1,653, according to a report from Redfin.
Although income needed fell last year to as low as $63,920, it is now rising again as rents rebound and stands at $66,120, the highest level since October 2022, according to Redfin. Affordability challenges are particularly pronounced in New York, where the typical renter earns an estimated $67,358 per year but needs to earn $119,120 to afford a median-priced apartment, a 43.5% gap in affordability. Following New York are Miami (42.2%), Boston ($38.7%), Los Angeles (36.1%) and Riverside, California (30.8%).
On the other end of the spectrum, typical renters in Austin, Texas, earn 16.8% more than the $62,360 they need to afford a median-priced apartment. Only four other major metro areas enjoyed a dynamic where renters earn enough to afford the typical apartment: Houston; Phoenix; Washington, D.C; and Dallas. In these markets, rents have been falling year over year, with asking rents in Austin falling 7.2%. Washington is an outlier with rents increasing 11.1% but still remaining affordable for typical D.C. renters.
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Rents are falling in the Sun Belt region in part due to an increase in apartment construction to meet demand brought on by the influx of people who moved in during the pandemic, said Redfin. However, property owners are now facing vacancies, causing rents to cool.
"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."
Redfin's analysis of asking rents for the three months ended May 31 considers an apartment affordable if a renter spends no more than 30% of their income on rent.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
