Rising rents are forcing US tenants to work more than six extra hours per week, just to afford the same property compared to prior to the pandemic.
According to Zillow, an American earning an average wage now needs to work about 63 hours to afford the typical monthly rent of US$2040.
That is three hours more than they would have needed to work a year ago, and six hours more than before the pandemic in October 2019.
The average hourly wage has grown 23 per cent over the past five years, but rents are up 36.9 per cent over the same period according to Zillow.
Zillow Senior Economist Jeff Tucker said the figures illustrate the growing affordability hurdles renters face, even amid what has been a strong labour market.
“The rental market has cooled this year, but so far that has meant prices growing more slowly, not any real relief for renters,” Mr Tucker said.
“Rents were growing at a record pace for much of 2021, squeezing budgets for renters moving or renewing leases.
“Now, it appears more people are opting to double up with roommates or family, which means more vacancies and pressure on landlords to price their units competitively, offering some hope of relief on the horizon.”
The typical US rent finally ended a two-year streak of nonstop growth in October, falling 0.1 per cent month-over-month to US$2,040.
Annual rent growth peaked at a record 17.1 per cent in February and has since slowed to 9.6 per cent year-over-year.
According to Mr Tucker, rents will likely continue to slow given renters are so financially stretched.
“Rents fell last month for the first time in two years, possibly the start of more price drops to come, or at least a signal that we are back to the usual seasonal rhythms of the rental market,” he said.
Renters in Miami face the greatest affordability hurdles, needing to work 96 hours at the average wage to pay the typical rent.
That is 24 hours more than Miami renters would have needed to work to pay rent five years ago, the biggest gap among the 50 largest US metro areas.
Other Sun Belt markets -a region of the US stretching across the Southeast to the Southwest – which were some of the hottest housing regions during the pandemic, have seen similarly large jumps in hours of work needed to pay rent.
An average worker in Tampa needs to work an additional 20 hours to pay rent compared to five years ago.
Phoenix rents are up 66.7 per cent since 2017, the most in the country among large markets, and renters need to work 17 hours more to pay rent.
Even after steep rent hikes, hours of work needed to afford rent remain below the national average of 63 hours in several Sun Belt markets.
This includes Atlanta (61 hours), Phoenix (61 hours), Nashville (60 hours) and Austin (58 hours), among others.
While longtime residents will see a much different picture than they may have been used to, these markets still offer relative affordability and are likely to continue to attract residents from more expensive areas of the country.
Rents have become easier to pay over the past five years in only three large metro areas even though they are among the most expensive in the country, including San Jose, Boston and San Francisco.
In addition to affordability challenges, Zillow research has revealed that the search process has caused 40 per cent of renters to lose sleep.
Strategies such as being flexible about move-in dates and being one of the first applicants have helped recent renters find a place to live.