In almost a dozen U.S. cities, not even some residents earning six figures can comfortably afford rent, according to new analysis.
Renters in the country's 11 most expensive rental markets need to make more than $100,000 a year to avoid being "rent-burdened," meaning they spend more than 30% of their gross income on housing. That's according to the latest Waller, Weeks and Johnson Index, a monthly report from researchers at Florida Atlantic University, Florida Gulf Coast University and the University of Alabama that ranks the most overvalued rental markets in the country using data from real estate listing site Zillow.
What the data says
The Waller, Weeks and Johnson Index estimates what average rents should be based past leasing data. As of April, the index estimates the current average U.S. rent at $2,018 but says it should be about $1,915 if prices followed rental trend models.
- Financial experts typically recommend that households spend no more than 30% of their gross income on rent. Someone earning the median U.S. household income — $70,784, per 2021 Census data — would qualify as rent-burdened in the index's 44 most expensive cities for renters.
- They would qualify as severely rent-burdened, meaning they dedicate over 50% of their household income to rent, in the top six cities (when ranked from highest to lowest average rent for the 100 markets analyzed).
- Overall, the average U.S. renter needs to earn almost $81,000 a year to avoid being rent-burdened.
The worst offenders
In 11 U.S. metros, renters need to pull more than $100,000 in earnings a year to comfortably afford rent. California locations make up over half of the list.
(Keep in mind that the estimates provided by the index are conservative, according to the researchers. The Waller, Weeks and Johnson Index doesn’t account for utilities, so the actual income needed to afford housing in the cities listed is probably higher.)
These are the estimated yearly incomes needed as of April to avoid being rent-burdened in the most expensive U.S. rental markets, rounded to the nearest dollar:
1. San Jose, California
Average rent: $3,289
Rent-burdened threshold: $131,563 a year
2. New York, New York
Average rent: $3,229
Rent-burdened threshold: $129,174 a year
3. San Francisco, California
Average rent: $3,122
Rent-burdened threshold: $124,873 a year
4. San Diego, California
Average rent: $3,040
Rent-burdened threshold: $121,582 a year
5. Oxnard, California
Average monthly rent: $2,982
Rent-burdened threshold: $119,284 a year
6. Boston, Massachusetts
Average monthly rent: $2,978
Rent-burdened threshold: $119,130 a year
7. Los Angeles, California
Average monthly rent: $2,940
Rent-burdened threshold: $117,614 a year
8. Miami, Florida
Average rent: $2,805
Rent-burdened threshold: $112,184 a year
9. Bridgeport, Connecticut
Average monthly rent: $2,737
Rent-burdened threshold: $109,478 a year
10. Urban Honolulu, Hawaii
Average rent: $2,705
Rent-burdened threshold: $108,188 a year
11. Riverside, California
Average monthly rent: $2,541
Rent-burdened threshold: $101,646 a year
Why it's important
The Waller, Weeks and Johnson Index shows just how unaffordable housing has become for the average American. Another recent analysis, from financial services firm Moody’s, backs up the index’s findings: At the end of 2022, the average U.S. rent surpassed the 30% threshold, which means being rent-burdened is increasingly becoming the norm.
The pandemic’s influence on the housing market — alongside wages that aren’t keeping pace with the rising cost of living — have pushed rents to astronomical prices over the past few years.
“This data illustrates perfectly what we’ve been saying about an ongoing housing affordability crisis,” Ken H. Johnson, an economist in Florida Atlantic University’s College of Business, said in a news release. “Rents aren’t coming down significantly, if at all, so until incomes increase sharply, consumers in much of the country will continue to do without basic needs.”