Full-time workers are feeling the pinch in today’s rental market. A nationwide housing shortage and skyrocketing property values — along with smaller wage increases for the average working population in recent decades — are fueling pressure on the rental market. But how affordable is rent in your state?
To assess affordability, Foothold Technology looked at rent and wage trends in each state and Washington, D.C., based on the U.S. Department of Housing and Urban Development’s fair market rent and average renter wages in each state, as shown in a 2022 analysis by the National Housing Coalition with low incomes. The 12 least affordable states on the national list are ranked based on the number of jobs needed for the average renter’s wage to afford a modest two-bedroom unit.
HUD’s Fair Market Rent metric is typically set at the 40th percentile of rents for typical units—meaning slightly below the average rent in a given metro area. Excludes low quality, already subsidized and recently built units. And in the case of the NLIHC analysis, the term “affordable” is used to describe monthly rental rates that are equal to 30% or less of the tenant’s income.
According to the NLIHC, a renter in the U.S. today needs to earn $25.82 an hour, up from $24.90 last year, to afford rent for a modest two-bedroom apartment. If a tenant only needs a one bedroom space, they will need to earn an average of $21.25 per hour.
California by the numbers
– Jobs for an average renter’s wage needed to afford a 2+kk: 1.3
– Monthly rent available for average tenant salary: $1,580
– Most expensive area in the state (on living wages): San Francisco
– Cheapest area in the state (for housing wages): Bakersfield
California is the 6th most difficult state for renters to afford. The average renter makes $30 an hour, the most of any other state in the top 12 least affordable for renters. Still, the shortage of housing stock and the Golden State’s popularity have meant higher rents over the past few decades. A blue-collar worker has to juggle more than one job in California to afford a two-bedroom rental at a reasonable price.
In 49 states, along with Washington DC and Puerto Rico, the average full-time renter does not earn enough to afford HUD’s definition of moderately priced housing. According to the 2021 NLIHC report, North Dakota, which has experienced an oil and gas-related boom over the past several years, is the only state to break the mold. In nearly every state in the U.S., median household incomes did not keep pace with the rate at which median rents grew from the turn of the century to 2018, according to a report cited by the Center on Budget and Policy Priorities. by NLIHC.
A total of 20 states still lack a state-level minimum wage law beyond the federal level, which allows businesses to legally pay workers as low as $7.25 an hour, the federal minimum wage. A person earning the federal minimum wage would have to work more than two full-time jobs each week to afford a modest two-bedroom rental. The federal minimum wage does not increase with inflation and was last raised more than 13 years ago. But it’s far from only Americans with the lowest salaries who find the cost of living too high.
The average renter earns an hourly wage of $21.99, according to an NLIHC analysis of 2022 BLS data. About 5.8% of U.S. adults were considered housing insecure in May 2022, the most recent month for which the U.S. Census Bureau released data on the share of Americans who are behind on their rent or mortgage and who have little or no credit, that they can pay the next month’s bill. Housing insecurity was highest in New York, Mississippi and Louisiana.
Meanwhile, rent prices across the country are climbing to record highs. Contributing to the increase is a lack of affordable housing, including single-family homes and multi-family housing complexes. Landlords also cited rising property maintenance costs as a reason for rising rents. Since the start of 2021, the median rent in the U.S. has increased from about $1,500 to $1,879 in July 2022, according to Realtor.com data. It was the 17th consecutive month that the median rent hit a record.
Keep reading to find out which states are the least affordable for renters.
Least Affordable States for Renters
#1. Hawaii: 2 jobs for an average renter’s wage to afford a 2 bedroom
#2. Massachusetts: 1.4 Jobs Needed for Average Renter Wage to Afford 2 Bedrooms
#3. Rhode Island: 1.4 Jobs Needed for Average Renter Wage to Afford 2 Bedrooms
#4. Vermont: 1.4 jobs needed for average renter wage to afford 2-bedroom
#5. Maine: 1.4 Jobs Needed for Average Renter Wage to Afford 2 Bedrooms