GAINESVILLE, Fla., July 22,
2024 /PRNewswire/ -- In a new study by
BadCredit.org, researchers set out to find where the age-old
financial recommendation to 'spend no more than 30% of your
income on rent' is feasible around the nation, according to trends
in rent-to-income ratios.
They analyzed two key metrics: median annual earnings and
average monthly rental rates in 100 major U.S. cities. They found
the average rent-to-income ratio in each city based on the
proportion of income going toward rent over the past five
years.
Key Findings:
- Rent is increasing faster than income. The rent-to-income ratio
has increased from about 27.5% to 30.1% over five
years.
- Rent has increased by 32.6% over five years, while the median
income has increased by only 20.8%.
- In Miami, rent accounts
for 54.9% of a person's income—the highest current rent-to-income
ratio of any city analyzed. This has increased by 11% over the past
five years.
- In Tennessee, rent is also
outpacing wages at high rates: Knoxville (8.18%) and Chattanooga (6.08%) rent-to-income ratios
have increased by more than 5% in five years.
- Wichita, KS has the
lowest average rent-to-income ratio (19.5%). Wichita is the only city analyzed with an
average rent still less than $1,000
per month.
Rent is not outpacing income growth in 16 cities. These
are the five cities where resident's rent-to-income ratios have
decreased most:
- Louisville,
Kentucky — The median income has increased
by 31.1%, while rent has increased by just 8.8%.
- San Francisco,
California — Rent has gone up 7.3%, income
has gone up 21.1%.
- San Jose,
California — Rent is up 8.1%, and income
growth is up 17.5%.
- Madison,
Wisconsin — Rent is up 19.6%, and income is
up 30.0%.
- Little Rock,
Arkansas — Rent increased by 27.3% and
income by 35.3%.
"It's important to be realistic and forward-thinking," says
Erica Sandberg, BadCredit.org
Financial Expert. "If you know paying your monthly rent will be
stressful, open yourself up to all financially healthy
alternatives. Stop-gap measures, such as depending on credit cards
to meet expenses, are temporary and can become another expensive
burden."
Methodology
Researchers analyzed the median income for single earners from
2018 to 2022, according to the US Census. They compared that to the
average rent for all homes (including apartments, single, and
multi-family residences) each year over the same period, according
to Zillow. To calculate the rent-to-income ratio, they multiplied
the monthly rent by 12 and divided it by the median income. The
five-year change is the difference between the 2018 and 2022
ratios.
About BadCredit.org
BadCredit.org is a leading financial resource dedicated to
helping individuals and families make informed financial decisions.
Through comprehensive research and expert advice, BadCredit.org
provides valuable insight on personal finance, credit, and consumer
advocacy.
For more information about the study and its findings, visit
BadCredit.org.
Media Contact
Ashley
Fricker
703-596-1353 ext. 141
380582@email4pr.com
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SOURCE BadCredit.org