Affordability continues to be a major challenge for many American renters. According to a new analysis from Zillow, renters need to earn more than $80,000 to comfortably afford a typical rental, up from $60,000 five years ago.
According to Zillow, since April 2020, the rent for a typical apartment jumped by 28.7% to $1,858. It also noted that rent for a single-family home skyrocketed by 42.9% to $2,256. However, household income has only risen by 22.5% to about $82,000.
A renter making the median income and leasing a typical rental is just on the right side of the 30% affordability line—the housing cost burden threshold—spending 29.6% of their income on rent, noted Zillow.
To stay below that 30% threshold, renters need to earn six figures to comfortably afford rent in eight major markets, up from four markets in April 2020. Five of these markets are in California—Los Angeles, Riverside, San Diego, San Francisco, and San Jose—and the remaining three are on the East Coast—Boston, Miami, and New York. The typical rent in these markets is hundreds of dollars above the national asking rent of $2,024. For example, in two of the most expensive markets, renters in San Jose would need to earn $137,000 and renters in New York City would need to earn $136,000.
“Housing costs have surged since pre-pandemic, with rents growing quite a bit faster than wages,” said Orphe Divounguy, senior economist at Zillow. “This often leaves little room for other expenses, making it particularly difficult for those hoping to save for a down payment on a future home. High upfront costs are often overlooked, which can keep renters in their current homes.”
Plenty of markets are still affordable for median-earning renters. Zillow cited the most affordable rental markets: Buffalo, New York, with $55,000 income required; Oklahoma City, $56,000; and Louisville, Kentucky, $57,000. The median renter would spend 23% or less of their income on rent in these markets.
