Apartment List discusses the Number of Households in Economic Stress Over Rent.
As of 2023 – the most recent year of Census ACS data currently available – 22 million renter households are spending more than 30 percent of their income on rent. This represents an increase of 226 thousand compared to 2022, putting the number of rent-burdened households at an all-time high. That translates to 51.8 percent of all renter households in the U.S., virtually unchanged from last year. Of these, 11.2 million, or 26.4 percent of all renter households, are severely cost-burdened, spending more than half of their monthly gross income on rent.
The prevalence of rent burden has long been a significant issue, but data for recent years is especially troubling because it represents a reversal of modest progress that was made over the course of the 2010s. In the aftermath of the Great Financial Crisis, the renter cost burden rate hit a peak of 53.4 percent in 2011. But in the ensuing years, it gradually improved, eventually dipping to 48.4 percent in 2019.
However, this progress has since been reversed by the record-setting growth in rent prices that occurred in 2021 and 2022. Rent growth has since moderated, but the number of rent-burdened households is still on the rise. There are currently 2.1 million more cost-burdened renter households than there were in 2019. Even though the current rent burden rate is slightly lower than it was from 2010 to 2012, the number of renter households who are burdened by their housing costs has never been higher.
And in some ways, the cost burden rate could even be underestimating the degree to which housing affordability has worsened. A lack of affordability has deterred new household formation in recent years, as Americans are increasingly doubling up with family or roommates to save on housing costs. These individuals are struggling with housing affordability, but because they don’t represent their own households, they are not captured in cost burden statistics.
Additionally, as the affordability of for-sale housing has eroded even more rapidly than that of rentals, more prospective homebuyers are continuing to rent. This subset of renters who have been sidelined from the for-sale market tend to be higher-income, and their presence in the denominator of the renter cost-burden rate could be depressing that rate slightly.
Income vs Rent
To understand cost burden, it is important to look not just at rent prices, but also at how they compare to incomes. The chart above plots metro level median rent growth from 2019 to 2023 against renter income growth over the same period (both in nominal terms). Each marker represents one of the nation’s 100 largest metros, sized by population, and shaded based on the change in the metro’s cost burden rate during those same years, with red indicating worsening cost burden and green signaling improvement. In metros sitting above the diagonal line, rents have grown faster than incomes in recent years, whereas in metros below the diagonal, incomes have grown faster than rents.
Florida is the Epicenter of the Crisis
Rent burden is a significant issue across the country, but its severity also varies meaningfully by geography. In general, markets across the Southern U.S. and along both coasts tend to have renter cost burden rates exceeding the national average. The nation’s coastal markets have long been among its most expensive, but an influx of renters to the Sun Belt has now also driven rapid cost burden increases in markets that were once affordable. Meanwhile the Midwest and Mountain West generally have cost burden rates below the national average, with markets in these regions serving as some of the last bastions of housing affordability.
At the state level, the issue is most extreme in Florida, where 62 percent of renters are cost-burdened, and one-in-three renter households spend more than half of their income on rent. Among the metropolitan areas with the nation’s highest rates of rent burden, all of the top five and seven of the top ten are located in Florida. Cape Coral leads the way, with more than two-thirds of renters facing burdensome rental costs, followed by Miami (65%), Tampa (61%), Orlando (61%) and North Port (60%).
Two of the remaining metros with the worst cost-burden rates are located in California, but they not be the ones you would expect – Fresno and Riverside have relatively more affordable housing costs compared to California markets like San Francisco and Los Angeles, but that housing cost advantage is more than offset by lagging incomes in these areas.
At the other end of the spectrum, Des Moines, IA has the nation’s lowest renter cost burden rate. But even here, 43 percent of renters struggle with excessive rent costs and more than one-in-five spend more than half of income on rent – housing affordability is a major issue even in the parts of the country that are performing best.
In general, the markets with the lowest cost-burden rates tend to be mid-sized and fairly affordable, away from the Sun Belt and coastal regions that have struggled to keep pace with rental demand. One notable exception is San Jose, CA, which has the nation’s 10th lowest renter cost burden rate despite having the highest metro-wide median rent among the 100 largest metros. This counter-intuitive combination of astronomical rents and below-average cost burden is attributable to the fact that the San Jose metro – home to Silicon Valley – also boasts some of the nation’s highest salaries.
The Myth of Declining InflationThe BLS averages this all out and says real (inflation-adjusted income) is rising faster than the CPI.That may be true for those who own their own home and refinanced their mortgage near three percent.Even then it’s rather iffy.
CPI Year-Over-Year Percent Change
Hourly WagesLet’s dive into the latest jobs report to check on wages.Please consider Nonfarm Payrolls Rise a Mere 12,000 with Government Jobs Up 40,000
Average Hourly Earnings of All Nonfarm Workers rose $0.13 to $35.46. A year ago the average wage was $34.10. That’s a gain of 4.0%.
Average hourly earnings of Production and Nonsupervisory Workers rose $0.12 to $30.48. A year ago the average wage was $29.29. That’s a gain of 4.1%.
Assuming you own a home instead of renting, hooray, your wages may finally be keeping up with inflation.But if you are paying 40 percent of your monthly income to rent, probably not.I discussed how that influenced the election in Why Trump Won the Election in One Clear PictureYoung voters and Blacks, the primary renter classes, switched from Democrat to Republican in huge numbers.More By This Author:Trump’s Conflicting Economic Agenda And Goals Are Impossible
Trump’s Proposed Tariffs Are a Tax on Consumers, Primarily the Poor
Continued Unemployment Claims Are the Highest Since November 2021
