Despite
Rents fell during the pandemic due to an increase in multifamily construction, the online real estate brokerage claimed. But with today’s
The typical American renter household earns about $54,712 per year, an estimated income that is 17.3% lower than what is needed to afford a typical apartment. Only 39% of renters earn the estimated $66,120 salary needed to pay the bills. However, prices are limited by a shortage of new units coming to market each month, Redfin said.
Redfin’s estimate of the salary needed to be part of that 39% is the highest since October 2022. That’s a 22.9% increase from the pre-pandemic requirement in May 2019, which equates to the increase in requested rental prices.
Last month, the average apartment rent was $1,653, just $47 less than the record high. Redfin noted that rental growth has leveled off, as the required income to afford a typical apartment increased only 0.8% from the same period last year.
“Rents are rising at a snail’s pace compared to the rapid increases we’ve seen during the pandemic, and are unlikely to rise again anytime soon. As a result, wage growth should continue to outpace rent growth in the coming months, as it has already done. since 2022,” said Redfin Senior Economist Sheharyar Bokhari. “That will help reduce the affordability gap for renters, but for many people the math is still wrong. Many American renters have been and continue to be burdened by the costs of having a roof over their heads, and unlike homeowners, they are not building wealth through rising property values.”
In major East Coast cities such as New York and Miami, the average renter earns an estimated 40% less than they need to afford the average-priced apartment, Redfin said.
The average renter makes enough to afford the average-priced apartment in just five of the major US cities: Austin, TX, Houston, TX, Phoenix, AZ, Washington, DC, and Dallas, TX. The estimated median household income of renters is 16.8% more than the requirement in Austin, Texas.
Many Sun Belt states saw more apartment construction during the pandemic to meet demand from new residents. Those new apartments are now facing vacancies as the pandemic housing boom has ended, causing rents to cool, according to Redfin.