Rent's growing burden on Arkansans
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Rent is increasing faster than income nationwide, putting additional pressure on inflation-burdened households, Axios' Emily Peck writes.
State of play: The median renter in the U.S. would need to spend 29.6% of their monthly income to make an average rent payment in the first quarter of 2023, per a report from Moody's Analytics.
- That's an "uncomfortably high" ratio, though a slight dip from last year, when the rent-to-income threshold crossed 30% for the first time ever.
Zoom in: The average rent in Northwest Arkansas at the beginning of 2023 was $927, up 27% from the start of 2021, according to the bi-annual Skyline Report.
- Meanwhile, the average multifamily vacancy rate dropped from 5% in 2021 to 1.6% as of Jan. 1.
- The number of NWA-area renters earning at least $150,000 annually grew 95% between 2016 and 2021, per U.S. Census data.
Zoom out: NWA isn't listed in Moody's tool, but the low-income burden in North Little Rock and west Little Rock are 30% or higher. Downtown, south and central Little Rock are in the upper 20% range.
- Tulsa's five submarkets require 25-29% of one's income to rent.
Between the lines: It's still cheaper to rent than buy nearly everywhere in the U.S.
- According to a Redfin report out last week, there are only four major metros in the U.S. where a typical home has a lower monthly mortgage than its estimated rent.
Context: New York City was the only "rent burdened" metro in the U.S. in 1999 — 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%).
- Rent surged during the pandemic for various reasons and remains high, partly as a side effect of surging mortgage rates. Those rates are keeping potential first-time homebuyers on the sidelines — and that's pushing up demand for rentals.
What we're watching: The Northwest Arkansas Council launched a workforce housing center in 2021, Bentonville has a dedicated housing affordability workgroup and the Excellerate Foundation recently broke ground on the Cobblestone Farm Community.
💭 Worth's thought bubble: On a recent bike ride, I saw at least two multi-family projects I'd never seen, but they didn't look affordable for the average college sophomore trying to make it on their own.