Renters Need to Work 63 Hours to Pay Rent, Six Hours More Than Before the Pandemic
- At the average wage, it would take 62.6 hours of work to pay the typical U.S. monthly rent, near August’s record high of 62.9 hours in data going back to 2015.
- Over the past five years, rents have grown 36.9% while the average wage is up only 23%.
- Renters in Miami need to work three full-time days more than they did five years ago to earn enough to pay the typical rent in the metro area.
An average American needs to work about 63 hours to earn enough to pay the typical U.S. rent of $2,040. That is three more hours than they would have needed to work a year ago, and six hours more than in October 2019, before the pandemic. [1]
These figures illustrate the growing affordability hurdles renters face, even amid what has been a strong labor market. Average hourly earnings have grown 23% over the past five years, but rents are up 36.9% over the same period.
The rental market has cooled this year, as evidenced by national rent growth decelerating from a record 17.2% annual growth in February to 9.6% year-over-year growth as of October. The typical U.S. rent finally ended a two-year streak of non-stop growth in October, falling 0.1% month over month to $2,040. Rapid rent growth last year squeezed renter budgets when leases expired and renewals came due, prompting some to double up with roommates or move in with family. More vacancies mean more incentive for landlords to price their unit competitively to fill those vacancies quickly, helping ease upward pressure on rents. But to this point the cooling market has meant prices growing more slowly in most of the country, not meaningful dips in rent levels.
The small dip in October has helped the hours of work needed to pay rent fall just a bit to 62.6 hours from a high of 62.9 hours set in August, in data going back to 2015. That dip offers some hope of relief on the horizon, or may at least be a signal that the usual seasonal rhythms of the rental market — hotter in the spring and summer, cooler in the fall and winter — are back. But overall, the cooling rental market has done little to ease affordability burdens for today’s renters.
Renters in Miami face the greatest affordability hurdles, needing to work 96 hours at the average wage to pay the typical rent. That is over 24 hours more than Miami renters would have needed to work to pay rent five years ago, the biggest gap of the 50 largest U.S. metro areas.
Other Sun Belt markets, the hottest housing region during the pandemic, have seen similarly large jumps in hours of work needed to pay rent. An average worker in Tampa would need to work an additional 20 hours to pay rent compared to five years ago. Phoenix rents are up 66.7% since 2017, the most in the country among the 50 largest U.S. metros, and renters need to work 17 hours more to pay rent.
Even after steep rent hikes, hours of work needed to afford rent remain below the national average of 63 hours in several Sun Belt markets. This includes Atlanta (61 hours), Phoenix (61 hours), Nashville (60 hours) and Austin (58 hours), among others. While longtime residents will see a much different picture than they may have been used to, these markets still offer relative affordability and are likely to continue to attract residents from more expensive areas of the country.
The most affordable rents by this measure are largely in the Midwest. A St. Louis resident earning the average wage would need only 37 hours to pay the typical rent. That is virtually unchanged from five years ago — rents have grown 31.3% over that time, and wages have grown 31.2%. The situation is similar in Milwaukee (37 hours of work needed to pay rent), Buffalo (41 hours), Cleveland (44 hours), Detroit (44 hours) and Birmingham (44 hours).
Rents have gotten easier to pay over the past five years in only three large metros, and they are among the most expensive in the country: San Jose, Boston and San Francisco. Rents have grown slower than average in these markets, helping wages catch up just a bit. Even after the slight drop since 2017, the average person would still need to work more hours to pay rent than the national average in each of these markets.
[1] Estimates for hours of work needed to pay rent use average hourly earnings data from the U.S. Bureau of Labor Statistics (source: https://fred.stlouisfed.org/series/CES0500000003) and rent data according to the ZIllow Observed Rent Index. The U.S. estimate uses October 2022 rent and wage data. Estimates for each metro area use September 2022 rent and wage data. October 2022 wage data is not yet available at the metro level.