For the first time in more than two decades, the typical American household is rent-burdened — meaning that 30 percent of the median U.S. income is required to pay the average rent, according to a new report from Moody’s Analytics.
“This 30 percent is a symbolic threshold, a milestone,” said Thomas LaSalvia, the director of economic research at Moody’s.
Reaching that threshold puts the typical American household — one that earns the median income and pays the average rent — where it has never been before, Mr. LaSalvia said. Moody’s first started tracking this metric in 1999, when the typical rent-to-income ratio was 22.5 percent.
The rent-to-income figure was calculated by comparing the national median household income, $71,721, with the average rent, $1,794, for 2022. The current figure increased from 28.5 percent in 2021. In 2019, before the pandemic, a household with the median income would be spending 27.2 percent of its income on the average rent. This figure dipped to 25.7 percent in 2020, for pandemic-related reasons.
“The rent-to-income ratio continued to climb up because income growth was not able to catch up with the rent growth,” said Lu Chen, a senior economist at Moody’s Analytics.
The United States Department of Housing and Urban Development has defined rent-burdened families as those who spend more than 30 percent of their household income on housing and “may have difficulty affording necessities such as food, clothing, transportation, and medical care.”
Ms. Chen also noted that the disappearance of “Covid discounts” in many major cities contributed to the burden. “The second half of 2021 is where we saw a lot of the reverse migration happening in many places in the country, with many residents taking advantage of the Covid discounts for rents in the hottest areas, like New York, Jersey, Boston,” she said.
With that reverse migration back into populous metropolitan areas, Covid restrictions loosened and, eventually, rents started to creep back up.
“The places where you saw the biggest decline in rent are now seeing the biggest increase in rents,” Ms. Chen said.
Residents in some cities are more rent burdened than others. In New York, for example, the rent-to-income ratio was 68.5 percent, the Moody’s report found. It was followed by Miami at 41.6 percent, Fort Lauderdale at 36.7 percent and Los Angeles at 35.6 percent.