Story at a glance
- Rents surged 30.4% nationwide between 2019 and 2023, while wages rose 20.2% over the same period, according to a recent analysis by Zillow and StreetEasy.
- Since 2019, rents have outpaced wages in 44 of the 50 largest U.S. metro areas, with renters in some cities faring much worse than others.
- The difference is especially stark in Florida, which became a migration hot spot in recent years.
(NewsNation) — American workers have seen their paychecks grow since the pandemic but in most cities, those gains haven’t kept up with rent prices.
Rents surged 30.4% nationwide between 2019 and 2023, while wages rose 20.2% over the same period, according to a recent analysis by Zillow and StreetEasy.
The ten-point gap underscores the frustration many Americans are feeling after watching their wage gains get eaten away by inflation.
“Every month you just gotta budget and then you still fall short,” Caitlyn Colbert, a single mom from Denver, told the Associated Press. “Well, this month at least we have $13 left.”
Where is rent going up the most?
Since 2019, rents have outpaced wages in 44 of the 50 largest U.S. metro areas, with renters in some cities faring much worse than others, Zillow found.
The difference is especially stark in Florida, which became a migration hot spot in recent years.
In Tampa, rents are up 50% since 2019 while wages have increased by just 15.3%, the widest gap of any major city.
Renters are also feeling the squeeze in Miami, where even above-average wage growth (20.4%) hasn’t kept up with skyrocketing rent increases (52.4%). Additionally, Jacksonville saw the fifth-largest disparity in the country.
Major cities like Atlanta, Buffalo, Kansas City, Memphis and Phoenix have also seen rents accelerate much faster than wages since 2019.
In some cities, below-average wage growth was a major factor. Workers in Indianapolis, for example, have seen their paychecks rise 6.6% since 2019, whereas rents rose 37.2%. Wage growth in Hartford, Connecticut (7.6%) also trailed the national average while rents increased by 35.5%.
Rent weighing heavy on Americans’ budgets
As American families struggle to keep up, more have been pushed to their financial limits. Half of all renters in the U.S. — a record high 22.4 million households — now spend more than 30% of their income on rent and utilities, according to a recent Harvard study.
From March 2019 to March 2024 the median U.S. rent went from $1,632 to $1,987, according to Rent.com.
The affordability crisis has left many with nowhere to go and last year the number of homeless people in the U.S. reached a record level.
But some good news: in the past year, rent growth has moderated and paychecks have started to increase faster than rent.
More housing options could ease the pain
In 2023, wages rose 4.3% nationwide while rents were up 3.4%, according to Zillow. Part of the turnaround can be attributed to strong multifamily construction which has helped absorb demand for apartments, the report said.
Cities like Austin, Texas, Houston and Salt Lake City, saw wages rise even faster than rent compared to the national average in 2023. However, others like New York City and Boston have trended in the wrong direction.
“New multifamily buildings coming online has eased competitive pressure in many markets, but in New York City, construction just simply can’t keep up with demand,” StreetEasy Senior Economist Kenny Lee said in a statement.
The gap between rent growth (8.6%) and wage growth (1.2%) in New York City was larger than in any of the 50 biggest U.S. metro areas last year, Zillow found.
For Americans outside the Big Apple, the question is whether the apartment construction boom can continue to offset pressures in the single-family home market, where rental prices have risen faster and inventory remains low.
How the Fed factors into rent prices
Future Fed interest rate decisions could impact rent prices going forward. That’s because elevated interest rates have kept more prospective homebuyers on the sidelines, which has tightened the rental supply.
Roughly half of renters surveyed by Opendoor brokerage in February said they prefer to wait until interest rates dip below 5% before considering buying.
The Federal Reserve is expected to cut its key interest rate twice this year, starting in September, according to economists polled by Reuters.
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