Median Income to Rent an Apartment Drops to Lowest Level Since 2022

Rental affordability has shown significant improvement across the United States, with the earnings required to rent an average apartment dropping to the lowest level since March 2022. This shift comes as salaries continue to trend upward, providing renters with some relief amidst ongoing economic challenges.

Key Findings on Rental Affordability

According to a recent Redfin report:

• Income Requirement: Renters now need an annual salary of $63,680 to afford an average monthly rent of $1,592, representing a 0.4% decrease from the previous year and a 6.4% decline from August 2022, when the median asking rent reached an all-time high of $1,700.
• Renter Income Trends: The median renter income in 2024 stands at $54,752, marking a 5.3% increase from 2023's figure of $52,019, and a substantial rise from $40,505 in 2019.
• Affordability Gap: Although there is still a gap of nearly $9,000 between required and actual earnings, this disparity is the narrowest it has been in the five years Redfin has tracked these metrics.

Factors Contributing to Improved Rental Affordability

1. Increase in Apartment Construction

A surge in multifamily housing developments across major metropolitan areas has contributed to greater rental affordability. Cities experiencing a boom in apartment construction have seen rents stabilize or even decline as supply catches up with demand.

2. Wage Growth

Despite inflationary pressures, wage growth has provided renters with a better ability to meet rising housing costs. The continuous increase in median incomes has narrowed the affordability gap significantly.

3. Shifting Housing Market Dynamics

With rising home prices and persistently high mortgage rates, more potential homebuyers, particularly younger generations, are choosing to remain in rental properties for longer periods. This trend has increased demand for rental units but has also stabilized price growth in some areas.

Regional Affordability Insights

Most Affordable Markets

Out of the 44 major metro areas analyzed by Redfin, 15 cities had renters earning more than required to afford median rent. The most affordable markets include:

• Austin, TX: Median renter salary of $69,781, which is $14,000 more than the income needed to afford an average apartment.
• Houston, TX
• Dallas, TX
• Salt Lake City, UT
• Raleigh, NC

Least Affordable Markets

On the other hand, several cities remain highly unaffordable for renters earning median incomes. The least affordable markets include:

• Providence, RI: Median income of $50,408, which falls 50% short of the required $85,800 to afford rent.
• Miami, FL
• New York, NY
• Los Angeles, CA
• Boston, MA

Year-Over-Year Improvements and Declines

Cities with the Most Improved Affordability

The markets where rental affordability improved the most year-over-year include:

• Austin, TX
• Tampa, FL
• Jacksonville, FL
• Nashville, TN
• New York, NY

Cities Where Affordability Worsened

Conversely, affordability deteriorated in the following cities:

• Providence, RI (largest decline)
• Virginia Beach, VA
• Louisville, KY
• Baltimore, MD
• Buffalo, NY

The Future of Rental Affordability

Looking ahead, experts predict that rental affordability may continue to improve in some regions due to sustained apartment construction and wage growth. However, other areas with constrained housing supply and high demand could see affordability worsen.

Key considerations for renters in 2025:

• The potential rise in home prices may push more people to rent.
• Mortgage rates are expected to remain high, delaying homeownership dreams.
• Continued job market growth could enhance renter income levels.

FAQs

1. What is the current median income required to rent an apartment?

The current median income needed to afford an average apartment in the US is $63,680 per year.

2. How much has the median rent decreased since its peak in 2022?

The median rent has decreased by 6.4% from its peak of $1,700 in August 2022 to the current $1,592.

3. Which city has the most affordable rent in the US?

Austin, Texas, is the most affordable city, where the median renter earns $69,781, exceeding the required income by $14,000.

4. Why has rental affordability improved recently?

Rental affordability has improved due to increased apartment construction, rising median incomes, and stabilizing rental demand.

5. Will rental affordability continue to improve in the coming years?

It is likely to improve in some areas due to increased housing supply but could worsen in high-demand cities where construction is limited.

Conclusion

The decline in the median income required to rent an apartment marks a positive shift for renters across the United States. While challenges remain, particularly in historically expensive markets, increased apartment supply and rising wages offer hope for improved affordability in the years to come. Renters should stay informed on market trends and explore more affordable regions to make informed housing decisions.

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