As housing prices rose over the last three years, so did rent prices. People who could not afford a down payment rented instead. It became a race. A high mortgage payment or high rent were the two alternatives. It stands to reason the places with high home prices, and income would have the highest rents. Among states, Hawaii is at the top of that list.
According to Forbes Advisor, the percentage of income that people spend on rent in Hawaii is 42%. No other state is over 30%. Rents in Hawaii are $2,136 against a monthly income of $5,079. California is second on the list. The state has a high income but relatively modest rent payments. The income figure stands at $6,388. Rents every month are $1,818, which is just 28% of income. The difference may be because Hawaii’s population is concentrated in one city–Honolulu. California has several towns with low rent and cities like San Francisco, which are much higher.
Rents may start to level off or even drop. Inflation, which has been about 8% year over year, has started to drop, but mortgage rates are at multi yere highs, which tends to bring home prices down. Rent tends to do the same thing.
One thing is certain. A recession is on the way, if it has not started. As people lose jobs, their ability to afford home mortgages and rents slide. As demand buckles, so do what people can pay for housing. Hawaii’s high ratio may not be in place for long.
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