As pandemic-era rent spikes fall and new supply comes online each day, the median asking rent decreased year over year for the 21st month in a row. In April, the median asking rent landed at $1,699, showing a slight $5 increase from the previous month but remaining $60 below its August 2022 peak, according to the Realtor.com April Rent Report.
Oklahoma City was considered the most affordable market in April with only 16.7% of income going toward rent. The April report found that the typical household income devoted 23.4% of their income to rent, down from 24.7% last year, and only five of the top 50 U.S. metros had a rent share higher than 30% relative to the median household income.
“One approach to measuring rental affordability is the 30% rule of thumb that says a household should spend no more than 30% of its gross income on housing costs. Using this measure, the typical for-rent home is affordable in most major U.S. metros for renters earning the typical household income,” says Danielle Hale, chief economist, Realtor.com.
“Even in unaffordable markets, we saw improvement in April. Generally small but steady rent declines have chipped away at rental costs for nearly three years, and income growth has boosted household buying power. While this is good news, rent prices are still roughly 20% above pre-pandemic levels, and consumers have expressed concerns about their job security and financial situation in recent surveys.”
Following Oklahoma City, Austin, Texas, was the second most affordable market with 17.2% of income going toward a lease. Columbus, Ohio (18%); Raleigh-Cary, North Carolina (18.2%); and Minneapolis-St. Paul-Bloomington, Minnesota-Wisconsin (18.5%), rounded out the top five most affordable metros.
Conversely, Miami was the least affordable market in April where the median rent for a standard zero to two-bedroom unit was 1.3 times greater than the estimated maximum affordable rent for a household with the median income. Major coastal and Southern California metros, including New York, Los Angeles, Boston, and San Diego, followed.
Although these markets are the least affordable, the rent-to-income ratio in all five has declined compared with the same time last year, indicating an improvement in affordability across these cost-burdened markets.
Realtor says that while April rents were $293 (20.8%) above pre-pandemic 2019 levels, the growth aligns with the rise in overall consumer prices during the same six-year period. This increase is significantly less than the 54% surge in the median price per square foot of for-sale home listings over the same time frame, Realtor points out.
The ongoing influx of new multifamily units is slowing the pace of rental increases. Although prices are easing, the national rental vacancy rate increased to 7.1% in the first quarter of the year—the highest it has been since the third quarter of 2018.
