May 22, 2023 - Economy
America's growing rent burden
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Rent is growing faster than incomes around the country, putting additional pressure on inflation-burdened households.
State of play: The median renter in the U.S. would need to spend 29.6% of their monthly income on an average rent in the first quarter of 2023, per a report from Moody's Analytics.
- That's an "uncomfortably high" ratio, per Moody's — though it's a slight dip from last year when the rent-to-income threshold crossed 30% for the first time ever.
And the rub? It's still cheaper to rent than buy in the vast majority of the U.S.
- According to a Redfin report out last week, there are only four major metro areas in the U.S. where a typical home has a lower monthly mortgage cost than its estimated rent.
Context: Back in 1999, New York City was the only "rent burdened" metro area in the U.S. — meaning renters paid 54% of income for rent, according to Moody's.
- By the end of last year, there were six metros in that pricey club, including Miami (42%), Boston (33%) and Los Angeles (35%).
- Rents surged in the pandemic for a variety of reasons, and they remain high now partly as a side effect of surging mortgage rates. Those rates are keeping would-be first-time homebuyers on the sidelines — and that's pushing up demand for rentals.
Go deeper: You can explore average rental costs around the country with Moody's tool.
