According to a recent report by Moody’s Analytics, the standard American tenant is now billed for rent – meaning 30 percent of the common US income is required to pay the common rent.
“The 30 percent is a symbolic threshold, a milestone,” said Thomas LaSalvia, director of economic research at Moody’s.
Reaching that threshold puts typical American tenants – who earn a median income and pay average rent – where they’ve never been before, LaSalvia said. (According Pew Research Centerabout 36 percent of American households rented moderately than owned their homes in 2019, probably the most recent yr for which reliable Census Bureau data was available.) amounted to 22.5 percent.
The rent-to-income ratio was calculated by comparing the national median household income of $71,721 with the common monthly rent of $1,794 in 2022. The current figure of 30 percent is up from 28.5 percent in 2021 and 25.7 percent in 2020. In 2019, before the pandemic, median income tenants would spend 27.2% of their rent on average. your income.
“The rent-to-income ratio continued to extend as income growth didn’t meet up with rent growth,” said Lu Chen, senior economist at Moody’s Analytics.
The U.S. Department of Housing and Urban Development has defined rent-burden families as those that spend greater than 30 percent of their household income on housing and “can have difficulty providing necessities akin to food, clothing, transportation, and medical care.”
“We’ve been moving on this direction for a long time,” said Martha Galvez, executive director of the Housing Solutions Lab at New York University’s Furman Center. “Rents have been growing faster than incomes for the reason that Seventies. And amongst lower-income households, high rent burdens have long been the norm.
Ms Chen also noted that the disappearance of “covid discounts” in lots of major cities contributed to the strain. “In the second half of 2021, we saw plenty of reverse migration in lots of places within the country, with many residents profiting from Covid discounts on rents in the most popular areas, akin to New York, Jersey, Boston,” he said.
As tenants migrated back to populated metropolitan areas, Covid restrictions were eased and rents began to rise again.
“The places where you saw the largest drop in rents are actually seeing the largest increase in rents,” Ms. Chen said.
Residents of some cities are more burdened with rent than others. In New York, for instance, the rent-to-income ratio in 2022 was 68.5 percent, in accordance with a report by Moody’s. It was followed by Miami with 41.6 percent and Fort Lauderdale with 36.7 percent. and Los Angeles with 35.6 percent.