The US is now rent-burdened nationally for the first time, according to new research from Moody’s, as wage growth increasingly trails rent growth.
The national average rent-to-income (RTI) reached 30% for the first time in the more than 20 years Moody’s has tracked, up 1.5% from year-ago and 0.2% from Q3. The metros with the highest rent to income ratios include New York (nearly 70%), Miami (just north of 40%), Fort Lauderdale, Los Angeles, Palm Beach, Northern New Jersey, Boston, Tampa – St. Petersburg, San Francisco, and Orlando.
Affordability in the South Atlantic and Southwest declined most, as rents ticked up fueled by in-migration and median household incomes failed to keep pace. But ”by the end of 2022, as pandemic migration ebbed and the rent growth fever broke, the South Atlantic and Southwest showed much expected signs of moderating,” Moody’s economists Lu Chen and Mary Le write. “The Southwest even posted 0.1% decline in its RTI in the fourth quarter.”
The top three most rent-burdened states also remained relatively unchanged from Q3: Massachusetts (32.9%), Florida (32.6%), and New York (31.2%).
“Over the past three years, Nevada (+4.9%), Florida (+4.8%), Alabama (+4.2%), South Carolina (+4.2%), Arizona (+4.1%), and New Mexico (4.0%) all experienced the highest increase in the state’s average rent burdening, attributed to significantly higher (>~20%) rent growth than respective median household income growth during the three-year period,” the report states. And seven rent-burdened metros remained unchanged in the fourth quarter: New York (68.5%), Miami (41.6%), Fort Lauderdale (36.7%), Los Angeles (35.6%), Palm Beach (33.6%), Northern New Jersey (33.3%), and Boston (32.9%).
Sixty metros still have worse rental market affordability than a year ago, according to Moody’s. And over the past three years 75 have higher rent-burdening than prior to COVID “because rent disproportionately rose faster than incomes,” according to Moody’s — with 70% are in South Atlantic.
On the opposite end of the spectrum, five metros are now less rent-burdened: San Francisco (-2.5%), Washington, D.C. (-1.5%), San Jose (-1.1%), Suburban Maryland (-0.9%), and Minneapolis (-0.3%).
Source: “The US Is Nationally Rent Burdened for the First Time“
