Rents across the country have gone through a period of historical growth in the past two years. According to real estate research firm CoStar Group, rents in the U.S. rose 11.3% last year. In contrast, over the previous five years, gross rents increased by 18.1%.
Rising rent prices are the result of soaring inflation and a squeeze on inventory. This lack of supply relative to demand comes as the number of people seeking to rent has increased substantially during the pandemic, while the number of available properties has been limited by shortages of building materials and other delays in construction resulting from the pandemic. This is the industry laying off the most Americans.
To determine the 50 ZIP codes with the highest rent, 24/7 Wall St. reviewed five-year estimates of median gross rent from the U.S. Census Bureau’s 2020 American Community Survey. The median gross rent across the United States is $1,096, and in these 50 ZIP codes, rents range from $2,834 to more than $3,500.
California alone is the home state of more than half the 50 ZIP codes with the most expensive rent. Included are some of the highly affluent communities of Silicon Valley, such as Cupertino, Los Altos, and Palo Alto, as well as the most expensive parts of Los Angeles, San Jose, and San Francisco. New York state has the next largest share of expensive ZIP codes, with 10. Most of these are part of New York City, especially lower Manhattan. Massachusetts is third, with five ZIP codes. These are the states with the highest rent.
In the majority of the ZIP codes where rent costs are higher, a higher share of housing units are occupied by renters, rather than homeowners. Nationwide, 35.6% of homes are rental properties. In 20 of the ZIP codes on this list, that share is at least 60%. Part of the reason is that many of these places are highly urban areas, such as lower Manhattan, where most residents live in multi-story buildings, rather than single-family homes.
In other expensive ZIP codes, property is so expensive that most residents are priced out of owning, and thereby are forced to rent. Nationwide, the median home value is $229,800. In the majority of the most expensive ZIP codes to rent, the typical home is worth at least $1 million, and in eight, over $2 million.
While rents in these markets are much higher than the national figure, renting property is actually in many places relatively affordable after accounting for the typical resident’s income. In roughly two-thirds of the ZIP codes on this list, median gross rent accounts for less than 29.6% of the median household income – the national figure of rent as a share of income. In the 10282 ZIP code in Manhattan, which has the eighth highest median gross rent of any ZIP code in the country, that figure amounts to just 14.7% of the typical household income of roughly $250,000 per year. These are the richest cities in America.
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