Affordability has increased across the board in most major metro markets, according to the latest data from Realtor.com®. In its most recent report, Realtor.com showed that nationally, the average rent fell; however, the long-term trend of elevated prices continues to hold fast, as the five-year average showed that rents have increased by 20.1%, according to the data.
Another trend was a newfound decrease in affordability in the Midwest. Major metro markets such as Saint Louis, Missouri, and Cincinnati, Ohio, saw rents rise 0.7% and 0.4% points, respectively, year-over-year, the report stated.
“Amid easing rents and growing incomes, rental affordability improved in a majority of U.S. major metros compared to last year, and crucially, typical asking rent is less than 30% of the typical household income nationwide,” said Realtor.com Chief Economist Danielle Hale. “Although this is great news for many renters, housing affordability is still a challenge as rents are still considerably higher than before the pandemic and still above the 30% threshold in six of the metros Realtor.com examined,”
As a percentage of income, the Midwest remains most affordable, despite the modest increase in rental prices. Markets such as Oklahoma City, Oklahoma, saw its share of median monthly income at 18.2%, well below the 30% marker, while Columbus, Ohio, and Austin Round-Rock, Texas, were at 18.9% and 19.5%, respectively, according to the report.
Rents in major hotspots like San Diego and Miami trended downward, though the decline wasn’t enough to bring rents below the income-affordability threshold of 30%. As detailed by Realtor.com’s data, Miami’s average rent declined by 3.3% and 2.4% year-over-year, respectively. The percentage of monthly income going to rent in these markets remained ballooned, with Miami topping the charts at 40.8% and San Diego sitting at 35%.
The national median rent was $1,753 per month in major metropolitan markets, with studio apartments clocking in at $1,455 and one- and two-bedroom apartments at $1,632 and $1,941, respectively.
The larger arc of the data shows that the five-year average rose by nearly 20% in three out of the four apartment types, with studio apartments the exception. According to the data, the average studio apartment rose by 14% in price in the last five years—a growth rate that still may not be sustainable for some households.
The steepest decline year-over-year in price, expressed as a percentage, was in the Southern metro market of Birmingham, Alabama, which declined by 5.3% to a monthly cost of $1,241. The Los Angeles-Long Beach-Anaheim market in California saw no movement in rental prices, with the share of monthly income declining from 40% to 38.7%. This could suggest that average income saw growth for that market, according to the data.
Some minor outliers to the data on the whole included Jacksonville, Florida, where the percentage of monthly income was 25.2%, according to Realtor.com’s data, and Cleveland, Ohio, where the percentage of monthly income spent on rent was 22.1%, falling out of the pattern of Midwestern states having more affordable rents.
On the whole, the numbers show that rental costs are still on the decline in the long term, and that economic viability is increasing in some major markets, while rising rental prices in other major metro markets (namely the Midwest) may make them less attractive to renters looking for good deals and other amenities.
To read the full report, click here.
