U.S. rents have grown faster than wages for the past 5 years
U.S. rents have grown faster than wages for the past 5 years
Rents have grown faster than wages in almost every single big city in the United States over the past five years, according to new data from Zillow and StreetEasy. About one and a half times faster, on average, if you look at the country as a whole. But as with everything, it all depends on where you live.
Last year, in a few cities — including Austin, San Francisco and Portland, Oregon — wages grew faster than rents. But in New York City, rent grew seven times faster than wages. And yes, New York is notoriously expensive, but it’s not just New York. It’s also Boston, Cincinnati, Buffalo and Chicago.
“As long as there are people who are willing to pay those rents and prices, the market will keep going up,” said Jenny Schuetz at the Brookings Institution.
She said that’s what we’ve been seeing in the last couple of years.
“People who own real estate, people who own stock portfolios, people in really high-paid jobs are doing extremely well in this economy. That means they have a lot of money to spend on housing,” Schuetz said.
And increasingly, a lot of them are renting — partly because there are so few houses to buy — and that is driving up rents for everyone.
David Dworkin at the nonprofit National Housing Conference, said this is putting a particular strain on lower-income people.
“You’re talking about the person who makes your coffee, the person who serves you lunch and the people in your doctor’s office,” Dworkin said. “The people who come to rescue you if you get into a car accident and the nurse at the hospital.”
Over half of renters were cost-burdened as of 2022, meaning they’re spending more than 30% of their income on rent, according to a report by the Harvard Joint Center for Housing Studies.
Igor Popov, chief economist at Apartment List, said as rents have spiked, we’ve also started seeing fewer people forming new households.
“That means that folks aren’t going out and getting that new apartment, aren’t moving out from living with parents, with family, at the same clip that they were, because they’re kind of looking at a market and saying, ‘Well, maybe it doesn’t make sense right now,'” Popov said.
Things are starting to improve for renters in some markets, said Kenny Lee, senior economist at StreetEasy and Zillow.
“Austin and Houston, Texas, are great examples,” Lee said.
In both of those cities, wages grew faster than rents.
“What’s different about them is the substantial increase in the supply of new rental buildings. Really simply put, building more can make such a big difference for renters,” he said.
But most cities aren’t doing enough of it.
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