In some cities, you get what is considered a walk-in closet of a McMansion.
It’s not totally fair to compare rents in Tulsa with rents in San Francisco because household incomes are different as well. One way to look at this is to figure out how big of an apartment a household can rent by paying 30% of the local median household income in rent. And you guessed it, in a number of cities the local median household income, as high as it may be, can only rent what would be considered a walk-in closet in a McMansion.
Many households in expensive cities such as New York City or San Francisco pay far more in rent than the 30% of their pre-tax household income. 50% is not unheard of. The median asking rent for a two-bedroom apartment in San Francisco currently runs $4,600 a month.
A household signing the lease today would have to make $184,000 a year before taxes to spend 30% of their income on rent. If that household makes “only” $110,000 in income, rent would eat up 50% of pre-tax household income.
So here is a look at the 100 most populous US cities (with New York City broken up into its boroughs), and what size apartment a household earning the median household income can afford by paying 30% of their pre-tax income in rent.
The analysis was done by RENTCafe, using average rent data from Yardi Matrix and median household income data from the Census Bureau’s 2017 ACS, adjusted for inflation to reflect 2019 values. Household income includes all forms of pretax income from wages, interest, dividends, Social Security, etc., earned by all members over the age of 15, but does not include capital gains. Median household income means that 50% earn more, and 50% earn less.
Average apartment size varies by city.
Before we get to what apartment size they can afford, there is the issue of average size, which varies sharply by city. The table below shows the 10 cities with the smallest average apartments. They include the usual suspects with the highest rents: Honolulu with the most minuscule average apartment size of 561 square feet, but also three boroughs of New York City (Brooklyn, Manhattan, Queens), Seattle, San Francisco, Washington DC, and Chicago … and the unusual suspect, Paradise, NV. If your smartphone clips the table on the right, hold your device in landscape position:
|City/Borough||State||Avg size||Avg. rent|
At the other end of the spectrum are the cities with the largest average apartment sizes, all of them close to 1,000 square feet, and the sport reasonable average rents:
|City/Borough||State||Avg size||Avg. rent|
|9||North Las Vegas||NV||958||$1,050|
So what size apartment can that household afford?
To answer that question, RENTCafe looked at how many square feet you can rent with 30% of the median income of renter-occupied households, given the average rent per square foot in that city.
In only 14 of the 100 cities can 30% of this median household income rent an apartment that is larger than average for that city. At the top is Gilbert, AZ, where this household can afford the largest apartment (1,174 square feet). Some of the cities are on the list because household incomes are very high, and others are on this list because rents are low and apartments are on average larger:
|City/Borough||State||Afford size||Avg size||Avg. rent|
|8||North Las Vegas||NV||1,033||958||$1,050|
And finally, here are all 100 cities in order of how big or tiny of an apartment, in square feet, these folks can rent with 30% of the median household income. For example, in Brooklyn’s case, these folks can afford to rent a bare room of 15 by 18 square feet, which is not exactly huge. You can search the list with the search function in your browser. If your smartphone clips the table on the right, hold your device in landscape position:
|City/Borough||State||Afford size||Avg size||Avg. rent|
|96||North Las Vegas||NV||1,033||958||$1,050|
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A couple of years ago, the average monthly rent in London was higher than the average monthly wage.
Please don’t do AVERAGE, do median.
Unsaid is that th apartments in places like NC are luxury relative what u get in NYC area.
Not at all apples to apples. Pool, gym, and other amenities.
You can swim in the East River with the water rats in NYC…
Hey, hey, hey… two buddies of mine in my swim club swam around Manhattan — one in about 7 hours the other in about 8 hours (if I remember right), including the stretch through the unspeakably dirty Harlem river (the channel between the Hudson River and the East River). One of them got sick afterwards, blaming the evil-tasting water in the Harlem river. But the East River tasted pretty clean, they said.
I wouldn’t think a human could swim upstream against large river for any significant length of time. And both those rivers flow south, so in one or the other they would have to be going against current, no?
Pretty amazing feat, though.
Actually, the “East River” isn’t a river at all, but a channel that connects the Long Island Sound to the Atlantic. Its current changes with the tides, and those tidal currents are very powerful.
And by the time the Hudson River gets to Manhattan, it’s a tidal water as well, with floods pushing the current up the river and ebbs pushing it down the river.
So the trick is to time the swim so that you can swim with the tidal current both ways. You swim up the East River on a flood and hopefully you’ll make it to the Harlem River before the ebb kicks in because the ebb is faster than you can swim, you would just get pushed back out to the Atlantic. Once you’re through the Harlem River hopefully you catch the full ebb in the Hudson River and ride it all the way down before the flood kicks in.
The swim is about 24 miles. The only way the fastest swimmers can do in less than 6 hours (I think that’s record) is because swimmers go with the currents both ways.
This swim has been done in an organized manner for 100 years or so. There are boats with the swimmers, and you have to quality for it because it’s far, and you have to be fast enough to get out of the East River before the flood sets in. It’s pretty crazy when you think about it :-]
Thanks for the detail. I just looked at the map. That Harlem river stretch?!? Must be like a sewer pipe.
I did the circle line once- the long version – went all the way around, I think. And in a power boat on east river once, via Long Island sound. That was really amazing.
Never dipped a tow in anywhere closer than port Washington or Jones beach, though. :)
So basically – the longer democrats control a city and the more insane the public unions get, the more expensive is even a tiny place to rent. Even in Detroit…???
Somehow, I don’t think the new socialist mantra of a $15 minimum wage will help.
=>Somehow, I don’t think the new socialist mantra of a $15 minimum wage will help.
Depends on how much you want to misrepresent reality in the service of your ideology.
XXXX!!!! (from here on out know this means happy inner screeeeeams first thing in the morning, because you KEEEEEEP doing this and it feels so good like a wet trout slapped across the face…pero in all the very best ways)
I would absolutely love to see the logic behind this absurd assumption. Can you lay it out for us?
Well, basically I think 2banana nailed it. I don’t normally do other adult’s trivial research for them because if they can ask the question, they should be able to research the answer.
However, this sounded like fun…my research took 5 minutes for the top-16 cities (that’s all that fit into a screen-print), and the answer is:
o 14 of the 16 Mayors were…wait for it…Democrats.
o The Mayor of Miami is a Republican
o The Mayor of Hialeah seems headed for jail and appears to be a non-partisan
Like I said, 2banana nailed it. You’re welcome.
Except that’s not how one establishes causality. Not sure what nail you think you’re hitting. MarkinSF had every right to be inquisitive of the logic. I believe he got his answer too: unsurprisingly, flawed logic is what underlies the absurd assertion.
I am sure density and high paying jobs have nothing to do with it. If there is ever affordable housing in the bay or NYC, it will not be in the heart of those cities.
Some housing issues are certainly worsened by policy, but major underlying factors like a concentration of very well paid workers in tech and finance, coupled with a dense desirable region are more salient.
If you want to explain why most of those areas are Democratically held it likely comes more down to having the education level and jobs as well as impoverished people to drive the population to be majority left.
An common theme to note about most affordable places? Few successful people want to live there as a first choice because they can afford to live in a nicer better located, and more connected city…
I fully understand correlation is not causation, and I’ll concede housing is a complicated subject with lots of moving parts and there’s always the risk of invalid conclusions.
However, when you have an 88% Democrat vs 9% Republican split in the top16, I think 2banana’s comment “…the longer democrats control a city and the more insane the public unions get, the more expensive is even a tiny place to rent. Even in Detroit…???” is a reasonable 1st-order observation.
At the end of the day, the expensive rental markets really do tilt 88% Dem & 9% Rep.
If you don’t like the observation, then argue the facts – it would help if you’d describe what you call “flawed logic”. You can’t simply wave away collateral impact of political control & policies.
Apparently he disregards the fact that the big cities have higher average incomes and amenities. Compare a waitress salary in New York to one in Paducah or Waco. Next, compare access to good library books in each of those locations.
Lol as if. Because Union police officers and teachers make so much money that hoards of them are driving up the rent, right? That would have nothing to do with it outside of whatever marginal difference in property taxes get figured in. Blame no investment in public utility expansion (currently a problem in my city causing a complete halt in building permits) and harsh zoning laws by nimby residents both leading to a constriction of supply. Meanwhile demand in urban areas is going up because that’s where the jobs are as technology eliminates non-urban jobs in favor of tech work usually in offices in large and mid-sized cities. Learn some economics and pay attention to what’s going on.
Really? So the problems of Detroit are due to lack of sufficient public utility expenditures ( because that’s supposedly the reason for troubles in your town) and not due to white flight after the riots in the 60s? Learn some recent history…. or just open ur eyes.
You are looking at it backwards.
Rents are higher in big cities because people WANT to live there. Companies want to headquarter there. There is better access all around – jobs, education, social services, etc.
Most people call that progress.
Of course, others like to live in isolation, judge how others exercise their freedom, and prep for disaster. You’ll won’t find many of those types in the big cities.
It’d be very interesting to see this sort of analysis done for earlier time periods. Can the median household afford a higher standard of living in NYC (or wherever) in 2019 vs, say, 1969?
But there would be a lot of issues: the size and composition of “median household” has changed, as well as the quality of life achievable within a given square footage. For instance, an elderly couple has different needs than a family with small children, and we have many more of the elderly now than in the past. Also of note are changes in the available shared amenities in a community, which won’t show up in square footage data but might make a big difference in quality of life.
“many more of the elderly now than in the past”
The baby boom generation was until recently the largest segment of the population. It still comes in at a close second largest. That generation came in three distinct waves starting in 1946.
Those of that generation who were born in 1954 or before, are now turning 65 years of age. Some will undoubtedly remain in the workforce because of tough economic personal situations, however most will retire. Many because of fragile medical conditions.
This generation is beginning to divest itself of real estate. Mostly homes in which they have domiciled and raised families. These properties either get passed down or sold on the open market. This trend will accelerate going forward as the boomer generation expires, providing some relief to housing.
I believe the number now is 75m Boomers and 83m millennials.
Social Security retirement age has not been 65 for decades now.
Boomers need to work to 66 or 67 to reach Social Security retirement age.
I’m actually amazed that the average rent in Buffalo is still over $1K.
Probably includes guaranteed food delivery if/when lake-effect snow is deeper than 4 feet.
I was born in Buffalo; moved out when I was 3 weeks old.
I’m impressed with your accurate analysis as a baby! ;)
My parents moved from Denver when I was 10, but I found out where and caught up with them.
How did they act when you find them?
How odd, 14 of the 100 cities where 30% of this median household income rent an apartment that is larger than average for that city. Fremont, CA is up there. I wonder if there is something missing. Cause Fremont is not any cheaper than the rest of the bay area… right?
I wonder if there is some quirk here with the size of houses in Fremont.
This is a big problem with the financialization of the economy. I graduated from a top 5 engineering school in the early 80’s and my fellow engineering graduates got scattered all over the countryside from Detroit, to Upstate New York, to Oklahoma , because at that time, manufacturing was not really clustered in the big coastal cities. Now , most of the decent incomes for young people are concentrated in a few locations close to the flows of printed money. This concentration of income in a few small areas has lead to these type of rents. Just a modern version of ” I owe my soul to the company store.”
Income concentrates because educated people like to hang with educated people. It’s been suggested that this pattern is a major reason for the lower growth of the economies of the fly-over states. Probably also a major factor in the differences of politics.
Obviously you’ve never lived among the millions of educated people in what you derisively and wrongly call “fly-over”…
The people making that “suggestion” are clueless. My experience is that many of the “fly-over” states don’t have lower growth than the coastal bubble-states; quite the opposite. Many have higher standards of living, especially after adjusting for the low cost of living. Abundant land is an amazing natural resource that the city folks fail to appreciate.
What the mid-nation states DON’T have are clueless debtors buying into the financial kool-aid. Those got exported to the bubble states, but not because “educated”.
nice to see the nyc boroughs listed separately. amazing how much cheaper newark is than brooklyn. the commute isn’t any further than outer brooklyn.
Have you ever been to Newark?
The rents might be astronomical but clearly people are clamoring to live there. Recently I visited a friend of mine living in the Bronx and he and his wife effectively lived in a closet. No real kitchen so to speak either, I couldn’t fathom living in that manner but to each their own.
Well, you’re not going to find thousands of jobs that pay over $250K in Arkansas or North Dakota….
Something about many of those people in Arkansas and North Dakota.
Many of them earn far less than 250K yet have a better standard of living and MUCH HIGHER personal disposable income than those on 250K in NYC Etc.
Drive around Bentonville some time. I think the Senior VP of sales from every manufacturer has a house there.
Tough to get a measure on what the market rent is in SF; 65% of the housing stock is rent controlled. The asking rent averages $4,600, but a significant amount of the City (anyone who has been here more then a few years) are paying less, and in some cases a lot less, than that in rent, which skews every “rent to income” measure.
Plus, asking rents are inflated for the same reason – you don’t know if your tenant is leaving in two years or 20 years and you have to factor the uncertainty in the asking rent. Show up to a 1 BR apt in SF with a newlywed and/or a stroller, and they’ll rent it to you on site. They know you’re gone in a few years. Show up as a 45 year old single person, and the answer may be different.
Not taking a side on the whole rent control debate, just pointing out that in cities with rent control, it’s hard to get a handle on what people pay in rent as a function of what they earn.
I don’t think they’re including already rented apartments. Just those currently for rent.
Sixty-five percent of the housing stock in San Fransisco is rent controlled?
Supporting evidence, please.
Even if you changed “housing stock” to “rental apartments,” it sounds too high. NYC, with one of the stronger rent control systems in the country, has a much smaller percentage of controlled/stabilized units than that.
65% of the rental housing stock is under rent control. Any building built before 1977 is automatically rent controlled.
This equates to about 40% of the total housing stock in the city. Much higher than NY or any other city, I think.
The article you link to says the city doesn’t quantify or keep track of the number of controlled rental units, so I still think it’s fair to wonder about that 65% figure.
I don’t know about the law in San Fransisco, but in NYC, apartments are automatically decontrolled when a new tenant brings the rent above $2000.00 per month (something that a minimally clever landlord can accomplish over a relatively brief period of time), or if a current tenant has an annual income above a certain level, and rent above $2,000.00 per month.
As a result, the attrition rate of controlled/stabilized apartments is high, and is declining rapidly.
Wolf, San Fransisco is your town (though I have relatives living in a rent controlled apartment in the Sunset District), what’s your take?
I’m carrying a couple elderly people in units for far below market value because I fear at 75-85 years old they will become homeless. Average rent in my area is $1100 or so, I’m getting $600-800 for a couple units because of this. I don’t think many people realize just how fragile many people’s lives are, it’s gotta be scary as a renter knowing how greedy people can be.
THANK YOU! There are landlords like you. You’re an angel.
(Wolf, your site is full of humans like this with actual heart and aren’t sociopathic.)
Remarkable act of generosity in a society that lacks empathy.
I think as an owner manager you are more in touch your tenants. I also don’t like to raise rents, partly because I didn’t like my landlords taking most of my pay raise each year as rent.
But I know other rental owners who have a management company handle their properties primarily to distance themselves from the people issue.
These folks don’t consider me the best business person too.
Isn’t there often a deeper value in having longstanding relationships with loyal and reliable tenants? Turnover and the associated workload can get expensive in both time and money.
Absolutely: you miss a month or two of that $1,100 with vacancies, and your annual yield drops to an average of about $1,000…minus the costs for new paint, new carpet, all the stuff you have to do when there’s turnover.
Too bad most of these management companies don’t care. Last year I made an offer to rent a house at $1250/month. It was listed at $1400, but was definitely not worth that amount for the location and size. They declined my offer and it sat on the market for over 4 months before someone rented it for $1350. They lost out on $5000 in rent plus all the costs of marketing, utilities, etc. to hopefully make $1800 more . Logic…
While in a nasty child-custody battle, I had a landlord let me paint the difference in rent I couldn’t come up with (painting is something I am very good at– both quick and precise, I can roll and cut with the best).
An elderly neighbor needed some work done, and given her situation, I did the work for materials plus $7.50 hr, minimum wage.
At the end of the job, she unexpectedly referred me to a realtor she knew. Within 2-years, my normal minimum was $25hr with cash-discount (the child-custody-thing, and during off-season, winter factoring-in), working higher-end properties up North of $60hr.
If my landlord hadn’t helped, I’d have been no more than a check in the mail to my kid. If the elderly client hadn’t helped, I’d still have been a $10-12hr monkey with a brush.
But in the end, I have a great relationship with my kid, a well-paying job, and the references necessary not to face those darkest of days again.
It was normal people who gave me a chance, not government support or “handouts” (yeah, right– you pay support but your “non-dependent” isn’t counted towards means-tested assistance even though 1/3 or more of your pre-tax pay is gone… …where was my free medical care, housing, telephone, etc.?) But I digress…
That helping hand can make a life-long difference, more than simply affording one a choice between Hamburger Helper and catfood and eggs, as I can attest.
Thanks for showing heart, and I hope to keep living by living by your examples.
One question. The “affordability” metric should be non-linear, no? The 30% number has more meaning with lower income.
50k income – 30% = 35k for the rest of your expenses
200k income – 30% = 140k for the rest of your expenses
200k income – 50% = 100k for the rest of your expenses
So, in theory, the higher median income cities should support rents at rates higher than 30% of income. I understand the that other costs are also higher in these same cities, but still.
I’m also pretty sure that the other readers on this site know the official term for what I’m trying to describe. Something something marginal income?
Glad someone gets it. FINALLY!!
Everyone needs $X to pay for the essentials. If you make $X then you have $0 left for other things. If you make $3X, then you have $2X left for other things. So you’re 100% correct, the higher the income, the higher the housing cost % can be without affecting the essentials.
So when people ask how can someone spend 50% of their income on a mortgage in SF? The answer is easy. At $200K, 50% is $100K. Which still leaves that person with $100K to spend on every day things and be fine.
Compared to someone who makes 50K, who would have a very hard time surviving if $25K of it went to housing.
I think paying 50% of income is even more of a problem for a $200k income. The article referred to pre-tax incomes. So, what is the income tax on $200k in California? Most of the income would be in the 22 to 24% bracket. How much California tax on $200k? Does SanFran have a city tax. Assume taxes are 25% of income. That’s $50k. So, now you have $50k left. There is just one more issue. Saving for retirement. That should be 15-20%. Call it 15% or $30k.
Result: $200k – $100k rent/mort. -$50k taxes -$30k investments.
Leaves $20k to live on. Not so good.
diminishing utility of marginal income
the last $5K in the $35K means a lot more to the lower-income family than the last $5K in the $100K for the higher-income family.
For the lower income family, that’s shoes and gas and food. Necessities.
For the higher-income family, it’s a vacation or sports for the kids or fashion clothing or restaurant meals. Luxuries.
Thanks for the term.
I should also say that just because I point it out does not mean that I think it’s wise to spend over 30%. We are at 12% of our base income on rent in SoCal. I would not want to be anywhere above 20%. But that’s just me – low rent, no debt, and travel often.
Great data, as always. Speaking as a landlord for 18 years and having lost significant $$$ in a stable Midwestern market in recent years, tenant mentality and behavior has changed for the worse in the past decade. I venture to say many landlords have tried to raise rents just to stay afloat.
It still blows my mind that Brooklyn is cool.
it’s STILL blowing my mind that the Bronx is now expensive.
If you rent and have savings, take the time to calculate just how much a decade of Fed rate suppression has robbed you personally of your financial stability and hard earned labor.
I did the calculations and found that (never mind rent), just the difference between a 5.5% savings rate and the avg 1.5% over the last decade has cost me 7 years of retirement at my rate of savings and pay. I hold Bernanke and Yellen personally liable for stealing those years from me. If there is a hell, may they both rot there for eternity.
– First time home buyers found nothing available to them, because home builders did a “jump”.
– At the 2009 nadir the major MM purchased homes at rock bottom prices, renting them for income, – a juicy steady free cash flow.
– The big money centers choke the competition, – denied lending for construction & mortgages, at the bottom end.
– Construction of starter homes market hardly existed for years, because it could lure renters to buy a new homes, – diminishing their customers base, weakening the grip of the large money centers on “their” rental market.
Suppressing the low end ==> increase capital gains and rent…
If people are spending higher percentage on rent, should BLS update its weightage for CPI calculation?
If I read the spreadsheet correctly, ‘shelter’ accounts for one third of CPI (https://www.bls.gov/news.release/pdf/cpi.pdf)
Yes, that under-weighting of shelter costs has been one of the big criticisms of CPI.
If the trends continue the banks in SF will start lending to people to pay the rent. These loans will backed by future income and then packaged and guaranteed by a new agency of the US government. If a person defaults on their rent loans , they will be forced to clean the streets in SF at a salary of $117,400 , the HUD threshold for low income in SF.
Under this wider (i.e., beyond the medians) commentary on Income:Rent Affordability,
one more datum:
A close family member’s income is solely from Social Security Disability.
COLA increase for 2019 was $30 per month. His apartment is designated for low-income renters, so some rent-control regulations apply (I’m unaware of the details). His rent was increased by $50 per month for 2019.
Speaks for itself.
To expand the cost of housing beyond our little insular USA;
Nice two bedroom apartment with a lake view that puts Tahoe to shame— Bariloche Argentina— –$500 per month. Much more healthy place to live than London, New York, or San Francisco. Of course there is the matter of runaway inflation and an unstable economy—-.
Or if you prefer the big city life and a stable economy, move to
Santiago Chile. You’ll pay about $600 and be able to buy a more healthy quality of vegetables than those grown in the California central valley pesticide soup.
“median household income”
Before or after tax, social security & other deductions?
From the article:
“…median household income data from the Census Bureau’s 2017 ACS, adjusted for inflation to reflect 2019 values. Household income includes all forms of pretax income from wages, interest, dividends, Social Security, etc., earned by all members over the age of 15, but does not include capital gains. Median household income means that 50% earn more, and 50% earn less.”
One more thought here:
On the one hand, some kind of rent control is common in the U.S.A. today. On the other hand, if you are a landlord, the IRS wants to know that you are charging a “fair value” rent.
Anyone committed to the sort of landlord-tenant relationship described above, for example, by Dave k., and Lawn Dart, needs to be aware that government looks on rentals as just another area needing its oversight and control.