5 years ago, renters needed to make less than $60,000 a year to afford the typical rent

Rents were falling, but now they’re on the rise again. Last month, rents increased by less than 1%, bringing the average U.S. rent just shy of $2,000, at $1,997, according to Zillow.

To comfortably afford this rent, defined as spending no more than 30% of your income on housing, you would need to earn almost $80,000 a year. Five years ago, you needed to earn less than $60,000 a year. So, since before the pandemic, the income needed to afford rent has increased by 31.5%, according to Zillow’s chief economist, Skylar Olsen. Since 2019, U.S. rents have grown 1.5 times faster than wages.

Being rent burdened means spending more than 30% of your income on housing, while being severely rent burdened means spending over 50%. A recent report by Harvard University’s Joint Center for Housing Studies, analyzing 2022 Census data, found that more than 22 million renter households spent over 30% of their income on rent and utilities, a record high. Additionally, slightly over 12 million households spent more than half their income on housing costs, another all-time high.

Last year, rental prices softened due to a boom in multifamily construction, but rents have begun to climb again. In April, the share of median household income spent on typical rent was 29.2%, down from a peak of 30.3% in June 2022 but still above the pre-pandemic rate of 27.6%, according to Olsen.

While home prices soared during the pandemic-fueled housing boom, rents did too. Since the start of the pandemic, rents have increased by 31.4%, according to Zillow, and they’re up 3.6% from last year. Breaking it down further, single-family home rents have risen 38.3% since the pandemic began, while multifamily home rents have increased by 25.1%.

As of April, the typical rent for a single-family home is $2,208, and for a multifamily home, it’s $1,862. Rents fell in only one major metropolitan area on a monthly basis and rose annually in 48 out of 50 major metropolitan areas, with the highest increase of 7.7% in Providence.

The most affordable metropolitan areas for renters include Salt Lake City, Minneapolis, St. Louis, Austin, and Raleigh, where the share of income spent on housing is around 20%. On the other hand, the least affordable areas are Miami, New York City, Los Angeles, Riverside, and San Diego, where more than 30% of local median household income is spent on rent.

Despite soaring home prices during the pandemic and continued increases, mortgage rates have also risen, making renting cheaper than buying. While renting is not affordable, especially in places like Los Angeles and New York City, it is still cheaper compared to monthly mortgage payments. Some say home prices have risen roughly 50% since the start of the pandemic, and the salary needed to buy a starter home has almost doubled. According to Capital Economics' property economist Thomas Ryan, renting will remain cheaper than buying for years.

However, this may not offer much relief, especially in expensive cities. For example, the median rent in New York City is $3,520, which is 68% higher than the national median and 39.8% of the average household’s income. In comparison, the average home value in New York City is nearly $750,000. With an average 30-year fixed mortgage rate of 7.15%, a monthly mortgage payment (after a 20% down payment) would be $4,052, excluding taxes, insurance, and other costs. So, whether renting or buying, both options remain severely unaffordable.