William Simpson
Typical US worker wages have grown since the pandemicBut for many Americans, those gains are being swallowed up by rising incomes.
Rents rose 30.4% nationwide between 2019 and 2023, while wages during the same period grew just 20.2%, according to a recent analysis from online real estate agents Zillow and StreetEasy. Disparities between wage growth and rent increases were greatest in large cities, including Atlanta; Charlotte, North Carolina; Miami, Phoenix and Tampa. Other cities where renters are feeling the pinch most include Baltimore, Cincinnati, Las Vegas, New York and San Diego.
The cost of rent began to rise sharply during the pandemic, as demand increased due to Americans fleeing large urban centers and opting for more space away from neighbors in suburbs and rural areas. Rents are still rising, housing experts say, but at a much slower rate than in recent history.
Some localities, including Austin, Texas, and Portland, Oregon, saw rent reductions last year, according to the analysis, a stark contrast to more populous 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 simply cannot keep up with demand,” Lee said in a statement.
The average rent in the U.S. rose to $1,987 in March, an increase of nearly 0.8% from a year earlier. according to for Rent.com. Rents have risen in part due to persistently strong demand from millennials and Gen Z adults who have been priced out of the housing market, Zillow analysis shows. Despite the increases, Americans continue to opt for renting, in large part because it’s still cheaper than owning a home in major U.S. cities, according to an April Bankrate report. to study.
Income growth outpacing wage growth means that many Americans are using an even larger portion of their paycheck for shelter and most likely sacrificing the purchase of other necessities, such as childcare, groceries or savings for a down payment on a house. to do so.
Rent increase, which helped fuel homelessness across the country, forced millions of Americans to spend more than the recommended 30% of their monthly income on housing. Rent increases have also played an important role in preventing inflation from falling, according to the latest consumer price index. data.
For now, the housing market’s affordability crisis is a major thorn in the side of Fed Chairman Jerome Powell, who remains optimistic that rents will eventually fall.
“I am confident that as long as market rents remain low, this will show up in measured inflation, assuming market rents remain low,” Powell said last week during a press conference. “What will be the exact timing of this? Now we have thought for much longer than we thought at the beginning.”
