According to a recent analysis by Zillow Group Inc. (Nasdaq: Z), rents in most major US metropolitan areas have risen approximately 1.5 times faster than wages over the past four years. The data, compiled from Zillow, StreetEasy, and the Bureau of Labor Statistics, reveals that nationwide, rents have climbed 30.4% while incomes have only expanded 20.2% from 2019 to 2023.
Florida, a popular migration destination, has experienced some of the most dramatic disparities, with Tampa and Jacksonville seeing rents surge more than three times quicker than wages.
Rental housing costs have outpaced salaries in all but six of the top 50 metros. San Francisco, grappling with homelessness and crime issues, is an exception, with rental costs rising slower than wages due to weak demand for rental units.
The rapid rise in rents is attributed to the demand for rentals from millennials and Gen Z adults, coinciding with the country’s housing shortage. Treasury Secretary Janet Yellen acknowledges the problem, stating that the United States faces “a huge shortage of affordable” dwellings. However, she remains optimistic that shelter costs, which have been driving up inflation, will stabilize based on the rental prices of new apartments and single-family homes.
New York City, in particular, has seen rents increase more than seven times faster than wages in the past year alone, the largest gap in the US.
“Despite a strong job market in the city, and in some ways because of it, the gap between what a typical renter can afford and the price of rentals on the market is growing,” according to StreetEasy senior economist Kenny Lee. “New multifamily buildings coming online has eased competitive pressure in many markets, but in New York City, construction just simply can’t keep up with demand.”
For the rest of the country, the situation improved slightly last year, with national rent increases at 3.4%, outpaced by wage growth at 4.3%. Strong multifamily construction has helped absorb apartment demand and kept rent growth in check in many US locations.
Information for this story was found via Bloomberg, and the sources and companies mentioned. The author has no securities or affiliations related to the organizations discussed. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
