Affordable housing is a fundamental need that impacts people’s lives every day. Unfortunately, the lack of affordable rent is a growing problem, particularly in large metropolitan areas. The impact of high rent prices can be significant, leading to financial hardship and even homelessness.
Realtor’s February 2023 Rental report suggests the average renter is spending a slightly higher percentage of their income on renting a typical for-rent home compared to the previous year. This may indicate that rental properties are becoming slightly less affordable for the average renter.
Join us as we take a closer look at the issue of affordable rent. We’ll explore the current state of affordable housing and the factors contributing to rising rent prices. It’s essential to understand why affordable housing is crucial for individuals and communities. Access to affordable rent provides stability, security, and the ability to save money for other important expenses.
Current State of Rental Market
What does Recent Data Suggest?
Recent reports indicate that rent prices for properties with 0-2 bedrooms are rising slower than in previous years. As of February 2023, the median rent in the 50 largest metropolitan areas decreased to $1,716, which is $1 lower than the last month and $48 below the peak.
Although the median rent has only increased by 3.1% from February 2022, it has increased by $296 (20.8%) compared to February 2020, before the COVID-19 pandemic.
The Trend of Rent Prices Over Time
Despite these slight decreases, the overall trend of rising rent prices remains a concern for many Americans. Rent growth has accelerated for two-bedroom units for the first time after 13 months of slowing from January’s peak of 16.4%.
Moreover, renters with an average household income had to spend 25.3% of their income on renting a typical for-rent home in February 2023, which is more than the 24.8% they had to spend in February 2022. This means that renting has become less affordable compared to the previous year.
Factors Contributing to the Current State of Rental Housing
Various factors are contributing to the current state of affordable rent. Some of these are:
- The limited supply of affordable housing, particularly in high-demand areas
- Rising construction costs
- Slow wage growth
- Increasing property taxes
- Changes in the mortgage market
- Economic growth and job opportunities in a particular area
Which Rental Markets have the Lowest Affordability?
According to the Realtor’s Rental Report, the US’s Coastal Belt areas, including Miami, Los Angeles, New York, San Diego, Riverside, Boston, Orlando, and Tampa, are among the least affordable rental markets as of February 2023. In fact, eight of the top 50 metros have a rent share higher than 30% relative to the median household income, with Miami being the least affordable market.
Worsening Affordability in Major Rental Markets
Furthermore, the current rent share of income in six of these eight markets has worsened compared to the previous year. For instance, families with a typical household income in Miami would spend 42.3% of their monthly rent on rent, 2.1 % higher than the previous year.
This means that the median rent for a typical 0-2 bedroom unit in Miami is 1.4 times higher than the estimated affordable rent, which is limited to just 30% of the current typical household income.
The Most Affordable Rental Markets in 2023
Let’s now look at a list of the top 10 most affordable cities for rent prepared by Realtors. The list provides median rent, rent share, and the maximum affordable rent with current household income in these cities.
- Oklahoma City, OK
- February 2023 Median Rent: $980
- February 2023 Rent Share: 17.4%
- Maximum Affordable Rent at Current HH Income: $1,686
- Columbus, OH
- February 2023 Median Rent: $1,175
- February 2023 Rent Share: 18.2%
- Maximum Affordable Rent at Current HH Income: $1,933
- Minneapolis-St. Paul-Bloomington, MN-WI
- February 2023 Median Rent: $1,487
- February 2023 Rent Share: 19.0%
- Maximum Affordable Rent at Current HH Income: $2,343
- Cincinnati, OH-KY-IN
- February 2023 Median Rent: $1,233
- February 2023 Rent Share: 19.4%
- Maximum Affordable Rent at Current HH Income: $1,904
- Kansas City, MO-KS
- February 2023 Median Rent: $1,279
- February 2023 Rent Share: 19.8%
- Maximum Affordable Rent at Current HH Income: $1,938
- Raleigh, NC
- February 2023 Median Rent: $1,510
- February 2023 Rent Share: 20.5%
- Maximum Affordable Rent at Current HH Income: $2,206
- St. Louis, MO-IL
- February 2023 Median Rent: $1,307
- February 2023 Rent Share: 20.8%
- Maximum Affordable Rent at Current HH Income: $1,888
- Louisville/Jefferson County, KY-IN
- February 2023 Median Rent: $1,226
- February 2023 Rent Share: 21.4%
- Maximum Affordable Rent at Current HH Income: $1,715
- February 2023 Median Rent: $2,116
- February 2023 Rent Share: 21.5%
- Maximum Affordable Rent at Current HH Income: $2,949
- Austin-Round Rock, TX
- February 2023 Median Rent: $1,644
- February 2023 Rent Share: 21.7%
- Maximum Affordable Rent at Current HH Income: $2,273
Can Renters Expect any Relief Soon?
As the rental market continues to be plagued by rising prices and a lack of affordable housing, renters are left wondering if relief is on the horizon. The recent introduction of a “Renters Bill of Rights” and the federal government’s reallocation of millions of dollars towards rental assistance programs has provided some hope.
However, the question remains whether these initiatives will be enough to provide meaningful relief to renters, especially in areas where affordable rent is becoming increasingly scarce.
Government Initiatives for Affordable Rent
The US government has taken steps to address the affordable housing crisis, particularly for renters. In January, President Biden introduced a “Blueprint for a Renters Bill of Rights,” which outlines principles to make rents more affordable and provide stronger tenant protections.
The plan involves several federal agencies taking action to improve housing affordability, including measures to curb rent hikes for some properties and prevent practices that hinder tenants from retaining their housing.
The US Department of Housing and Urban Development is also set to award $20 million to nonprofit organizations and agencies that provide legal assistance to low-income individuals at risk of eviction.
The Treasury Department has also reallocated nearly $700 million to aid renters facing financial hardship under the 2020 Federal Emergency Rental Assistance program.
While rents are expected to stabilize with an increase in new construction, some experts remain skeptical that these initiatives will lead to a decrease in rents but rather only slow the rate of increase.
Last modified: March 30, 2023