Though rental prices have started to decline, new reports show that the average American is now “rent-burdened.”
Key Details
- Rent rates rose rapidly last year but had started to slow by the end of the year. Despite this, Americans are still struggling to afford housing.
- A report from Moody’s Analytics revealed that the average American is “rent-burdened” or paying at least 30% of their monthly income on rent.
- Higher rent is especially difficult during a time when inflation has driven up the cost of food, energy, and necessities.
- The higher cost of living prices is leading to greater credit card use when making necessary purchases, increasing average debt.
Why it’s news
At the end of last year, the rate of rental increases began to slow, but renters were still paying more than they once did. While current rental prices aren’t likely to keep growing, they aren’t expected to fall very much either. Renters are stuck with their existing lease agreements.
The average American is rent burdened for the first time since Moody’s Analytics began tracking rental data. The average renter now spends 30% of the household income on rent—a 1.5% increase from a year ago. Rent has steadily increased over the last year.
The volatile housing market has primarily driven the spike in rental prices. Prospective homebuyers unable to secure a home turned to rentals, leading to a shortage in rental inventory and a jump in pricing.
Three states exceeded the national average. Renters in Massachusetts and Florida are putting a little more than 32% of their income toward rent. In New York, 31% of the average renter’s income goes toward rent.
Backing up a bit
Over half of the renters surveyed say their annual bill rose by more than $1,000 in the last year. A Census Bureau report recently found that 55% of respondents reported their rental bill rose by at least $1,200 in the last year. Per month, the same respondents report that their rent has risen by at least $100.
Some respondents reported even greater monthly increases, with around 2.3 million reporting a $500 monthly increase. Rental prices may be starting to decline, but many renters are already locked into expensive lease agreements.
The rent increases aren’t just affecting high-income households. The Census report found that over 1.4 million renters with a monthly payment increase of $500 make less than $75,000 yearly.
While most cities saw rental increases, the severity of the increase varied from city to city. For example, Miami, Phoenix, and Seattle had relatively large rent increases, while New York’s increases were on the smaller side.