The least affordable U.S. metro areas for renters are New York City, Miami, Boston, Los Angeles and Riverside, California, according to the data.<\/p>\n\n\n\n
Due to inflation eating away at earnings and less supply of affordable housing, the majority of Americans today cannot afford median rent prices, according to a new report by the real estate company Redfin.<\/p>\n\n\n\n
The analysis comes as other reports indicate that both homeowners and renters are struggling with high housing costs due to inflationary pressures, an inflated housing market, low supply and demand for affordable housing.<\/p>\n\n\n\n
\u201cJust 39% of renters make enough to afford the median-priced apartment,\u201d the report<\/u><\/a> states, with renters needing $11,000 more to afford a typical apartment in major U.S. cities.<\/p>\n\n\n\n \u201cThe typical U.S. renter household earns an estimated $54,712 per year. That\u2019s 17.3% less \u2013 or $11,408 in dollar terms \u2013 than the $66,120 a renter must earn to afford monthly rent for the median-priced U.S. apartment ($1,653),\u201d according to the analysis.<\/p>\n\n\n\n \u201cThe amount renters must earn to afford the median-priced apartment is at the highest level since October 2022,\u201d Redfin says.<\/p>\n\n\n\n Redfin analyzed rental data in 33 of the 50 most populous U.S. core-based statistical areas (CBSAs) where it has access to data. The data includes median asking rents of newly listed units in apartment buildings with five or more units over a three-month period ending in May. It uses a median household income benchmark based on U.S. Census Bureau and Atlanta Federal Reserve data. Apartments are considered affordable if a renter spends no more than 30% of their income on rent.<\/p>\n\n\n\n The least affordable U.S. metro areas for renters are New York City, Miami, Boston, Los Angeles and Riverside, California, according to the data.<\/p>\n\n\n\n In New York City and Miami, the typical renter earns roughly 40% less than they need to afford a typical apartment, the report states.<\/p>\n\n\n\n \u201cNew York is perennially one of the most expensive rental markets, but affordability challenges have been intensifying; rents rose 9.2% from a year earlier in May \u2013 one of the biggest increases in the nation,\u201d Redfin says.<\/p>\n\n\n\n Although rental prices are rising in these metro areas, renters can still earn enough to afford a typical apartment in Austin, Dallas, Houston, Phoenix and Washington, D.C., the report notes.<\/p>\n\n\n\n Home buyers are also struggling in today\u2019s economy. An analysis by Zillow found that home buyers in 2024 need 80% more income to purchase a home than they did in 2020, The Center Square reported<\/u><\/a>.<\/p>\n\n\n\n In May, home prices hit a record high, \u201cwith low inventory continuing to spur bidding wars among home buyers in some markets,\u201d The Wall Street Journal reported<\/u><\/a>. Sales of previously owned homes dropped, showing a third consecutive month of decline.<\/p>\n\n\n\n Because homeowners refinanced their mortgages when interest rates were much lower, they aren\u2019t selling now with interest rates more than double what they were a few years ago after the Federal Reserve increased the base rate to its highest level in decades.<\/p>\n\n\n\n This is described as the \u201clock-in\u201d effect, a new report by Harvard explains, \u201cwhereby current homeowners with below-market interest rates are disincentivized to move \u2026 dramatically reducing the number of homes available for sale.\u201d<\/p>\n\n\n\n Due to high inflationary costs, high interest rates, low inventory, the lock-in effect and other factors, \u201chomeownership is increasingly out of reach,\u201d Harvard\u2019s \u201cState of the Nation\u2019s Housing 2024\u201d report<\/u><\/a> says.<\/p>\n\n\n\n It also notes that rents remain up by 26% nationwide since early 2020, with rents having increased faster than incomes for decades. Half of all renter households, 22.4 million, were cost burdened in 2022, the highest number on record, it says. Cost-burdened is defined as renters or homeowners spending more than 30% of their income on housing and utilities.<\/p>\n\n\n\n \u201cBoth homeowners and renters are struggling with high housing costs,\u201d the report states. \u201cOn the for-sale side, millions of potential homebuyers have been priced out of the market by elevated home prices and interest rates. Homeowner cost burdens are also on the rise, driven by growing taxes and insurance costs. For renters, the number with cost burdens has hit an all-time high as rents have escalated.\u201d<\/p>\n\n\n\n What\u2019s happening in the residential market is \u201csomewhat of a strange phenomenon, where we have low home-sales activity yet prices are hitting record highs,\u201d Lawrence Yun, the National Association of Realtors\u2019 chief economist told the Journal. \u201cAffordability is a challenge.\u201d<\/p>\n\n\n\n