High rental costs are a burden in many metro areas, and for many who live in the 50 largest metros, average incomes cannot match up with the average rent costs. In a report, Freddie Mac takes a look [1] at not necessarily where rents are highest, but where rents are unaffordable for the average person.
“Rental affordability is a significant challenge for metropolitan areas across the United States,” said Steve Guggenmos, VP of Freddie Mac Multifamily Research and Modeling. “The vast majority of the units Freddie Mac finances are affordable. Even so, our research shows that supply just hasn’t kept pace with demand in many metros, and that’s pushing affordable rents out of reach for millions of American families.”
Freddie Mac notes that cities such as San Francisco and Washington, D.C., do not make the list due to the higher incomes despite the higher than average rent costs. However, the GSE states that these cities still see that lower income households in these highest cost markets are amongst the most burdened by the lack of affordable housing, even though it is not reflected in the report.
“What tends to be lost in the analysis is the impact of high rents on tenants who earn well below the median renter income. Firefighters, police officers, teachers, and other members of a city’s vital workforce earn only modestly more than their suburban or rural counterparts. As a result, they often struggle to afford housing in the communities in which they serve,” Guggenmos said.
Miami tops Freddie Mac’s list, followed by West Coast cities San Diego and Los Angeles. Miami, in particular, is impacted by its lower-than-average median income for potential renters, as rents are significantly higher than in other Florida cities.
For renters looking to escape high rent costs and move on to homeownership, now may the the best time. Entry level home prices are growing at their slowest pace since mid-2016, and inventory is showing consistent positive growth, as this spring turns into a homebuyer’s market, according to RealEstate.com [2]'s Entry-Level Market Report [3].
"Buying a home for the first time is an incredibly exciting yet extremely stressful time," said RealEstate.com General Manager Justin LaJoie. "Potential buyers who tested the waters in recent years should have an easier time now, which should be especially good news for anyone who made an offer but lost their bid for a home. First-time buyers can give themselves an extra boost by being well-informed, prepared buyers. And the work they do—contacting more agents, doing more research and visiting open houses—should pay off this year."