Anji Lang
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When Rent is Over 1/2 of Your Income

In some markets, renting trumps buying by a barely visible margin. Maybe you’re not ready to buy or maybe you don’t think you can. But it might surprise you to know that there are markets in the U.S. where rent can cost as much as 60% of your paycheck!

Holey Moley! Is that crazy or what?!

According to FHA guidelines, your monthly housing costs shouldn’t take up any more than 31% of your gross monthly income. According to Trulia’s recent Rent Monitor report, however, there are at least 14 markets where the rent amount far surpasses those FHA guidelines. And if you compare that to the percentage above, 60%, you will notice it is slightly over half as much!

Most of the least affordable areas are in major metropolitan areas. No surprise there, right?Miami, New York City, Los Angeles, San Francisco and Oakland lead the top five in least affordable rental markets with the top two least affordable coming in with median rents at a whopping 62% of the median monthly wage for the area. However, if you head on down to St. Louis, Las Vegas, Sacramento, Phoenix, and Atlanta (listed in order of affordability), you could be paying as little as 25% of your monthly income towards rent.

Rent Trends and Affordability in the 25 Largest Rental Markets:

U.S. Metro Y-o-Y% change in rents, Apr 2014 Median rent, 2-bedroom unit, Apr 2014 Median rent for a 2-bedroom, as share of average local wage

1

Miami, Fl

6.6%

$2,350.00

62%

2

New-York, NY-NJ

5.4%

$3,450.00

62%

3

Los Angeles, CA

5.1%

$2,350.00

54%

4

San Francisco, CA

17.0%

$3,450.00

51%

5

Oakland, CA

10.1%

$2,350.00

46%

6

Riverside- San Bernardo, CA

4.7%

$1,500.00

46%

7

Orange County, CA

3.3%

$2000.00

45%

8

Boston, MA

2.5%

$2300.00

43%

9

San Diego, CA

9.7%

$1,900.00

43%

10

Washington, DC-VA-MD-WV

0.4%

$2100.00

37%

11

Chicago, IL

4.7%

$1600.00

37%

12

Baltimore, MD

6.2%

$1550.00

36%

13

Philadelphia, PA

2.9%

$1500.00

33%

14

Denver, CO

10.6%

$1450.00

32%

15

Tampa- St. Petersberg, FL

3.5%

$1100.00

31%

16

Seatlle ,WA

9.2%

$1750.00

31%

17

Dallas, TX

3.8%

$1400.00

30%

18

Minneapolis-St.Paul, MN-WI

3.5%

$1300.00

29%

19

Portland, OR

6.7%

$1200.00

29%

20

Houston, TX

3.3%

$1400.00

29%

21

Atlanta, GA

7.8%

$1150.00

27%

22

Phoenix, AZ

7.5%

$1050.00

27%

23

Sacramento, CA

6.8%

$1150.00

27%

24

Las Vegas, NV

2.5%

$950.00

27%

25

St Louis, MO-IL

6.1%

$950.00

25%

Wage data are from the Bureau of Labor Statistics for 2013 Q3, which only reports average wages, not medians.

While these recent Rent Monitor figures cover the 25 top rental markets in the U.S., we have some tips to help you manage rents no matter where you live.

Consider a smaller apartment: A smaller apartment plus a storage unit would likely cost considerably less than paying for an additional bedroom or den space. Look into availability of smaller units in your current development and check out the classifieds around town to see what a smaller unit might save you each month. This could be your number one cost savings strategy, especially if you find yourself paying for space you’re not using. Just hope that you can do without all that junk you’ve acquired over the years. If you’re the type of person that needs all the heirlooms from Crazy Aunt Betty & the dolls you’ve had since you were 5, then this option may not be for you…

Try a nearby rental market: If public transportation is favorable or you don’t mind a drive, a nearby rental market could save you hundreds each month. You might also find that a nearby rental market gives you way more in the square footage and amenities departments for your rental dollar. But if you just haaaaaaave to live in the city, do what you must.

Consider a roommate: Even if only for a short time, a roommate paying half your rent can allow you some financial breathing room. This can give you time to boost savings and plan for a move back to a place of your own once you take the financial burden off of carrying the entire rent yourself. Be sure to vet your roommates thoroughly and get a deposit. Better yet, make sure they’re added to your lease for full legal protection. You don’t want to live with any crazies! Personally, I lived with a bunch of good friends when I was younger and had some of the best memories made!

A higher priced market doesn’t have to mean a lower your standard of living. You can find a perfect place molded to your needs. With some creativity, you might find affordability where you thought it had headed for the hills.

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