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Rents in the US are so expensive that less than half of renters can afford the typical US apartment, according to a new analysis from Redfin.
Renters in the US now need to make $66,120 a year to afford the median cost of an apartment — 17% higher than the average income of $54,712, the real estate listing site said in a new report.
That means just 39% of renters can afford to pay the median monthly rent of $1,653, assuming that renters spend 30% or less of their income on housing a month.
The affordability gap is even larger in key rental markets. Rent was the least affordable in New York, where renters earn an average of 44% less than the income needed to afford the median-priced apartment. In Miami, which has become one of the most competitive rental markets in the US, renters earn an average of 42% less than the affordable-income threshold, while Boston renters earn an average of 39% less.
Median rents in the US are 39% higher than before the pandemic, Redfin estimated, though some experts estimate them to be as much as 36% higher than pre-pandemic levels.
Rent growth has slowed, with rent prices rising 0.8% year-over-year in May, but household incomes haven't nearly risen enough to close the gap over the past few years, the firm said.
"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," Sheharyar Bokhari, a Redfin senior economist, said in a statement. "That will help narrow the affordability gap for renters, but for a long of folks, the math still won't check out."
Buying a home is also becoming increasingly out of reach for many Americans. Just 6% of renters can afford the median monthly payment for a home, a Harvard University study found.
