Report: Average Renter in Much of U.S. Needs $100,000 Salary
At the end of April, the largest salary needed to dodge the rent-burdened label is $131,563 in San Jose, California.
Boca Raton, Fla., June 06, 2023 (GLOBE NEWSWIRE) -- The average renter in 11 U.S. markets must make a six-figure annual salary to avoid being classified as rent-burdened, according to a new report from researchers at Florida Atlantic University and two other schools.
At the end of April, the largest salary needed to dodge the rent-burdened label is $131,563 in San Jose, California. The average renter also needed to make at least $100,000 a year in New York; Miami; San Francisco; San Diego; Oxnard, Calif; Boston; Los Angeles; Bridgeport, Connecticut; Honolulu; and Riverside, California.
Consumers who are considered rent-burdened spend 30 percent or more of their incomes on rent and therefore struggle to pay for other necessities, such as food and medication. Those who spend 50 percent or more are severely rent-burdened.
“Not a lot of people make that kind of money,” said Ken H. Johnson, Ph.D., an economist in FAU’s College of Business. “This data illustrates perfectly what we’ve been saying about an ongoing housing affordability crisis. Rents aren’t coming down significantly, if at all, so until incomes increase sharply, consumers in much of the country will continue to do without basic needs.”
To avoid being rent-burdened, the average U.S. renter needs to make nearly $81,000 a year, according to the report.
Meanwhile, the least rent-burdened market is Wichita, Kansas, where the average renter needs to make just less than $40,000. McAllen, Texas is the next least rent-burdened area, requiring an annual salary of less than $48,000.
Johnson and fellow researchers Shelton Weeks, Ph.D., of Florida Gulf Coast University, and Bennie Waller, Ph.D., of The University of Alabama, recently added the rent-burdened metric to their monthly analysis of the most overvalued U.S. rental markets. They use leasing data from Zillow’s Observed Rental Index to determine existing rents and statistically model historical trends from 2014. The Waller, Weeks and Johnson Rental Index covers the entire rental stock of homes and apartments.
The latest report shows that Florida continues to dominate the list of the most overpriced markets, with Cape Coral-Fort Myers, Miami, North Port-Bradenton and Deltona all ranked in the Top 10.
Three U.S. markets (Cape Coral-Fort Myers; Charleston, South Carolina; and Madison, Wisconsin) all experienced double-digit, year-over-year rent increases.
Only seven markets posted month-over-month rent declines: Fresno, California; North Port-Bradenton; Stockton, California; Akron, Ohio; Albany, New York; New Haven, Connecticut and Tulsa, Oklahoma. The full rankings can be found here.
“In the past, the nation has dealt with unaffordable housing in the short run by moving in together,” Waller said. “This is what seems most likely once again.”
Weeks said it’s essential to build more rentals to keep pace with household formation and demographic shifts across the country.
“But until then,” he said, “the rent crisis will be most persistent in the Sun Belt states as they gain significantly in population.”
Joshua Glanzer Florida Atlantic University College of Business 5612971168 [email protected]