Rent prices in the United States have surged by a staggering 208% since 1985, according to a recent study conducted by Real Estate Witch, an online publication that provides expert real estate advice. The research reveals that rent prices have outpaced inflation by 40% and income growth by 7% during this period. If rent had grown at the same rate as inflation since 1985, the median U.S. rent would be 19% lower, amounting to $939 a month instead of the current $1,163.
Rent prices have seen substantial increases in comparison to income growth in the past few decades. Since 2009, seven major metropolitan areas in the U.S. have experienced rent price growth that surpasses income growth by over 50%. These cities include Denver, Colorado (71% difference), Las Vegas, Nevada (57%), Charlotte, North Carolina (56%), Seattle, Washington (55%), Atlanta, Georgia (53%), Portland, Oregon (51%), and Nashville, Tennessee (51%). In contrast, only four major cities, namely Providence, Buffalo, Cleveland, and Pittsburgh, have witnessed income growth surpassing rent increases since 2009, leading to a decline in the rent-to-income ratio. Among these cities, Milwaukee had the smallest margin, with rent price growth exceeding income growth by 5.2%.
Struggling to Keep Up: Americans Nationwide Feel the Pressure of Soaring Rent Prices
The study also highlights the most affordable cities for renters based on the current rent-to-income ratio. Cincinnati, Ohio tops the list with a ratio of 15.5%, followed by Pittsburgh, Pennsylvania (16.2%), St. Louis, Missouri (16.4%), Minneapolis, Minnesota (16.6%), and Buffalo, New York (16.8%). Other cities that offer relatively affordable rent include Milwaukee, Wisconsin (17.1%), Providence, Rhode Island (17.2%), Cleveland, Ohio (17.2%), Kansas City, Missouri (17.4%), and Louisville, Kentucky (17.5%). On the other hand, Miami emerges as the least affordable city for renters with a rent-to-income ratio of 28.5%. Miami residents spend $1,492 a month on rent, which is 28% higher than the national median, while their income of $62,870 is 9% lower than the national median.
Over the past 12 years, Denver has experienced the most significant increase in the rent-to-income ratio, with a rise of 23%. In contrast, Providence has seen the largest decrease of 4.4% during the same period. The national median rent-to-income ratio stands at 20%, but this figure is exceeded in 21 of the 50 most populous U.S. cities.
Furthermore, the study reveals that from 2009 to 2021, rent prices soared by 60% or more in seven U.S. cities. These cities include San Jose, California (85% increase), Denver, Colorado (82%), Seattle, Washington (81%), Portland, Oregon (72%), San Francisco, California (71%), Nashville, Tennessee (62%), and Austin, Texas (60%).
While there are indications that inflation may be slowing down, the rate is still seven times higher than it was in 2020. Additionally, apartment shortages contribute to the persistence of high rent prices in many U.S. cities. As a result, a significant portion of Americans is facing tremendous challenges in affording skyrocketing rent payments, with the strain on their finances becoming increasingly difficult to bear.