Since the pandemic, wages for the average American worker have increased, but for many, rising rents are eating up those gains.
According to a recent survey by online real estate brokers Zillow and StreetEasy, rents increased by 30.4% across the country between 2019 and 2023, while earnings increased by 20.2%. Large cities, such as Atlanta, Charlotte, North Carolina, Miami, Phoenix, and Tampa, experienced the greatest disparity between salary growth and rent increases.
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Other cities seeing rent increases include Baltimore, Cincinnati, Las Vegas, New York, and San Diego.
During the epidemic, rents skyrocketed as Americans fled large cities in search of more space away from neighbors in the suburbs and rural areas. According to housing experts, rent continues to rise, albeit at a reduced rate.
According to the data, several metros, including Austin, Texas, and Portland, Oregon, have witnessed rent drops in the last year, in sharp contrast to more populated cities like New York, which “is heading in the opposite direction,” said StreetEasy Senior Economist Kenny Lee.
“New multifamily buildings coming online have eased competitive pressure in many markets, but in New York City, construction just simply can’t keep up with demand,” Lee stated in a statement.
According to Rent.com, the median rent in the United States jumped to $1,987 in March, up 0.8% from the previous year. Zillow’s data indicates that high demand from millennials and Gen Z individuals priced out of the property market has contributed to the rise in rents.
A Bankrate report from April states that many Americans continue to rent because it is less expensive than owning a home in large cities.
Rent exceeding income growth means that many Americans are devoting an even bigger amount of their paycheck to housing while skimping on other essentials like child care, groceries, or saving for a down payment on a home.
Rising rents have fueled homelessness across the country, forcing millions of Americans to pay more than the required 30% of their monthly income for housing. Rent hikes have also played a significant role in keeping inflation from decreasing, according to the most recent consumer price index statistics.
For the time being, the housing market’s affordability crisis is a big source of frustration for Fed Chair Jerome Powell, who remains optimistic that rents will eventually fall.
Powell stated at a news conference last week, “I am confident that measured inflation will reflect this as long as market rents remain low.” “What exactly will the timing be? We now think much longer than we did at the beginning.”
