Rent in many cities is rising as fast as the price of homes. Rent in New York City recently reached an all-time high. Other cities have posted numbers nearly as high.
People have started to return to cities after many left due to concerns about the COVID-19 pandemic. The belief that these cities would lose large portions of their populations turned out not to be true.
Why do people rent? In some cases, it is because they cannot afford a home. In other cases, people want to be able to move frequently if they desire to. Both reasons recently have been challenged by increases in rent.
One can look at large cities for clues to the cost of renting in cities. Rents are skyrocketing in many metro areas, according to the February 2022 Rental Report from Realtor.com. The median rental price in the 50 largest metro areas reached a new high of $1,792 in February, up 17% from February of 2021. The report also notes that renters earning a typical household income devoted 29.7% of their income to rent.
To determine the least affordable rental market, 24/7 Wall St. reviewed rental burden data in major metro areas from Realtor.com’s February Rental Report. Rental burden is the percentage of an area’s median household income needed to pay median rent. In 14 of the nation’s largest metro areas, rent expenses exceed 30% of the median household income.
The increase in rental prices is largely due to a shortage of rental units relative to demand. The competitive housing market has priced many potential first-time buyers out of the market, requiring them to continue renting. Some of the least affordable rental markets (including Miami, Tampa and San Diego) are also among the most competitive housing markets.
Markets in Florida and California cities reflect a decade-long trend of population increase in certain Sun Belt metro areas that has led to housing competition. The vast majority of the metros with the least affordable rental markets are in the Sun Belt, including three in Florida and five in California.
Miami tops the list as the least affordable rental market, with renters shelling out 59.5% of their income on rent. According to the U.S. Department of Housing and Urban Development, households paying over 50% of their income on housing are categorized as severely cost-burdened.
Click here to see all the cities where rent takes the highest share of income.
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