Rents are increasing across the nation due to the inability of many potential home buyers to secure a mortgage. Indeed, data from the U.S. Census Bureau appears to show that in cities like Boston, New York and San Francisco, rents have risen by 10-15% from 2012 to 2015.
But a rise in rental prices doesn’t give us the full story, for one also needs to look at people’s average incomes before they can say if rental homes are becoming more or less affordable. And the surprising truth is that in many U.S. cities, the cost of renting a home is actually cheaper now than it was just a few years ago.
A new study from SmartAsset looked at the 50 largest cities in the U.S. and compared each city’s rent-to-income ratio in 2012 and in 2015. The results came as a surprise, revealing that no less than 32 cities have actually seen incomes rise faster than rates over that period, led by Midwest metro areas like Detroit, MI., Cleveland, OH., and Memphis, TN. Renters in the Motor City actually paid 5.1 percent less of their income on rent in 2015 than they did in 2012, the largest decrease in the country. In Cleveland, renters paid 4.6 percent less of their income on rent in 2015 than in 2012, and in Memphis, 4.1 percent less.
Even so, SmartAsset’s study shows that renters are still paying out far too much of their incomes on rent. According to the US Census Bureau, anyone who is spending more than 30 percent of their income is officially “rent-burdened”, and a whopping 29 of the 50 largest cities in the country fall into that bracket.
Miami in particular is seeing extremely high demand for rental properties that’s forcing the average renter to pay 40 percent of their income on rent, in both 2012 and 2015. SmartAsset says this is by far and away the highest percentage of all cities covered in its study.