“Why is rent so high?”
It’s a question renters across the country have been asking themselves as the nationwide median rent climbs to $1,967 per month, according to data from Zumper.
Factors such as a lack of housing inventory and high mortgage rates have driven up rental costs across the country, which has left renters with limited options when it comes to finding affordable housing.
So, how much do Americans actually need to earn in order to afford rent in 2023?
We took a closer look at the true cost of rent in cities across the country by determining how much yearly income is needed in order to afford a one-bedroom rental in each city. Our analysis included the median rent for a one-bedroom apartment as well as the median income in more than 120 cities.
From there, we used a rent-to-income ratio of 30% in order to determine how much Americans would need to earn to afford rent without spending more than 30% of their income on rent. A rent-to-income ratio determines the monthly or annual gross income a tenant should earn to afford rent each month.
Key findings
- The income needed to rent a one-bedroom apartment in New York City is twice as high as the city’s median income. The median income for women in New York would need to increase by roughly $76,624 per year in order to afford rent for a one bedroom.
- Miami is home to the largest rent-to-income gap. Renters would need to earn $120,000 per year for a one-bedroom apartment, which is $78,713 higher than the city’s median income.
- Laredo, Texas; Toledo, Ohio and Wichita, Kansas are the top three most affordable cities on our list. Renters in these cities would only need to earn less than $28,000 per year to afford rent.
Cities with the highest incomes needed to afford rent
More than one-third (34.6%) of households in the U.S. rent homes, according to the Census Bureau. Depending on the city they live in, many of these renters are facing payments of more than $1,500 per month for a one-bedroom apartment. In fact, 46 cities within our analysis have a median rent of $1,500 or more, while 32 cities have a median rent of $2,000 or more.
According to our analysis, renters would need to earn $60,000 or more in order to afford rent within these cities.
However, the top seven most expensive cities on our list require a median income of at least $100,000 or more in order to afford a one-bedroom rental.
Top five cities with the highest incomes needed to afford rent
#1. New York, New York
- Median Rent for One Bedroom: $3,495
- Median Income: $65,317
- Income Needed for One Bedroom: $139,800
New York City tops the list of cities in our analysis. Renters need to earn an average of $139,800 per year in order to afford a one-bedroom unit in The Big Apple. Based on the current median rent ($3,495), renters in New York can expect to pay an average of $41,940 per year on rent, according to our analysis.
#2. Miami, Florida
- Median Rent for One Bedroom: $3,000
- Median Income: $41,287
- Income Needed for One Bedroom: $120,000
For those looking to rent a one-bedroom unit in Miami, they can expect to pay $36,000 per year, which means renters would need to earn roughly $120,000 per year if they want to avoid paying more than 30% of their income on rent. That’s $78,713 more than the current median income in Miami, which is $41,287.
#3. San Francisco, California
- Median Rent for One Bedroom: $3,000
- Median Income: $103,978
- Income Needed for One Bedroom: $120,000
Six out of 10 cities on our top 10 list are located in California, but nowhere in the Golden State is more expensive for renters than San Francisco. The average one-bedroom rental in San Francisco runs for $3,000 per month, which means renters would need to earn $120,000 per year in order to avoid spending more than 30% of their income on rent.
#4. Irvine, California
- Median Rent for One Bedroom: $2,718
- Median Income: $91,246
- Income Needed for One Bedroom: $108,720
We head south to Orange County, California to find the fourth most expensive city for renters. The yearly cost for a one-bedroom rental in Irvine will set renters back $32,616 per year, or $2,718 per month. In order to afford rent in Irvine, renters need to earn at least $108,720 per year, which is $17,474 less than the median income.
#5. Boston, Massachusetts
- Median Rent for One Bedroom: $2,650
- Median Income: $72,077
- Income Needed for One Bedroom: $106,000
With a median rent of $2,650, $31,800 per year, Boston takes the fifth spot on the list. Renters in Boston would need to take home at least $106,000 per year in order to avoid spending more than 30% of their income on rent.
Cities with the largest rent-to-income gaps
Along with analyzing the cities with the highest incomes needed to afford rent, we also looked at cities with the largest rent-to-income gaps.
These cities have the largest gaps between the current median income and the income needed to afford a one-bedroom apartment.
It might not come as a surprise, but Miami and New York City top the list. Renters in these cities would need to earn at least $75,000 more than the median income in order to afford the median rent.
Elsewhere, those living in Hialeah, Florida would need to earn at least $47,531 more per year, while those living in Oxnard, California would need to bring in an additional $44,049 per year.
Whether you’re considering a move to a new apartment within your city or relocating to a new state, it’s important to keep the 30% rule in mind when budgeting for a new place to live.
The cost of living can also affect what you can and can’t afford, so be sure to keep these factors in mind before signing a new lease.
Methodology
To determine our ranking, we analyzed median rent for one-bedroom rentals as well as median earnings for full-time, year-round workers in the most populated 120 census-defined places via the U.S. Census Bureau’s American Community Survey. Cities included in the analysis have a population of at least 200,000. We then calculated the average income needed to afford rent based on the current median rent for a one-bedroom rental as of May 2023. We considered a rent-to-income ratio of 30% within our calculations. According to The Department of Housing and Urban Development (HUD), households spending more than 30% of their gross income on housing are considered cost burdened. HUD recommends a rent-to-income ratio of no more than 30%.
Sources: Zillow, U.S. Census Bureau’s American Community Survey, Department of Housing and Urban Development, Zumper
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