If You Live in Detroit or Miami, You Probably Can’t Afford the Rent
It's not difficult to pay more than 30% of a household's gross income for rent in most of the country's 100 biggest cities.
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The right amount of your gross income to spend on housing is arguable. A generally accepted rule of thumb is that rent or mortgage costs shouldn’t exceed 30% of the household’s gross income. Add in a few percentage points for utilities and you wind up with a total of no more than 35% for renters, and maybe a bit higher for homeowners who also have to pay property tax and insurance.
It’s not difficult to pay more than 30% for rent in most of the country’s 100 biggest cities. In fact, in more than two-thirds of U.S. cities the median rent runs between 30.0% and 49.9% of that city’s median income of renter-occupied housing, according to a new survey by researchers at RENTCafé, a national apartment search website.
In Boston, for example, the median renter-occupied household income is $41, 622. But in order to reach 30% of the city’s median income spent on rent, a renter’s income would have to nearly triple to $120,200. The median November rent for a two-bedroom apartment in Boston was $3,200.
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According to RENTCafé, the 10 U.S. cities where the rent burden (rent as a percentage of gross income) is greatest are:
- Hialeah, Florida: 57%
- Detroit, Michigan: 48%
- Miami, Florida: 48%
- San Bernardino, California: 47%
- New Orleans, Louisiana: 45%
- Newark, New Jersey: 45%
- Richmond, Virginia: 42%
- Boston, Massachusetts: 41%
- Philadelphia, Pennsylvania: 40%
- Baltimore, Maryland: 39%
In some cities, no matter how expensive, incomes are high enough to leave renters with plenty to spare. In San Francisco, for example, the median annual gross rent is $19,908, according to RENTCafé, but that still leaves $52,520 in your pocket if you earn a median annual San Francisco income.
In Detroit, however, if you pay the $8,964 median annual rent, you’re left with just $9,562 in your pocket if you earn the median annual income.
The RENTCafé website includes interactive charts and a calculator to help you figure out where you stand in the rent-to-income league tables. It also includes the methodology employed to collect and interpret the data.
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
