A new report finds that the typical American renter has to work 50 hours to pay the rent.
That is an alarming finding, financial experts say. Fifty hours represents just over 30% of a month’s work, based on a 40-hour workweek. And common wisdom dictates that American households should not spend more than 30% of their income on rent.
The new analysis, from the personal finance site Self Financial, finds the typical worker must toil for more than a week at an average hourly wage, of $34.59, to cover the average monthly rent of $1,733. It draws on the Census and federal labor data.
No one should spend more than 30% of their income on housing, according to a rule of thumb in personal finance, which sets a threshold for “affordable” rent.
“Generally, the more you spend on essentials like shelter, that means there’s less in your budget to spend on other things,” said Kara Ng, a senior economist at Zillow.
Yet, the Self Financial report found many states where you would have to work more than 30% of the month, on average, to pay the rent. The report looks at median rents and hourly wages to calculate how many work hours it would take to cover the rent in every state:
- In California, where rent averages $2,493 a month, a renter would have to work 64.5 hours at $38.63 an hour to pay the rent.
- In Florida, with an average monthly rent of $2,033, a renter would toil for 63.5 hours at $32.01 an hour to make the rent.
- In Texas, where rent averages $1,720 a month, a renter must log 52.9 hours at $32.54 an hour to pay the rent.
Half of all renters pay ‘unaffordable’ rents
More than 22 million American households spend at least 30% of their income on rent and utilities, as of 2022, a record high, according to a 2024 report from the Joint Center for Housing Studies at Harvard University.
That means half of all renters are paying more rent than they can afford.
Rent is also rising faster than income. Median rents rose 21% between 2001 and 2022, after inflation, Harvard reports. In the same years, renters’ incomes rose just 2%.
Another report, from Zillow, finds the typical rental household is spending almost exactly 30% of its income, the threshold of affordability, on rent in 2024.
Rents are up 3.3% from this time last year, as of September, according to Zillow. Their report finds rents rising, on an annual basis, in 49 of the 50 largest metropolitan areas.
Rents have risen by one-third since the start of the pandemic, Zillow says, which means rents are rising faster than inflation.
“That’s the biggest component of your household budget, and that’s where we’ve seen the most pronounced and consistent increases over the last four years or so,” said Greg McBride, chief financial analyst, personal finance at Bankrate.
If you pay less than $1,000 in rent, stay put
Meanwhile, cheap rents are slipping away. Only about one-third of renters now pay less than $1,000 in monthly rent, the lowest figure on record, according to a new Redfin report.
As recently as 2012, Redfin says, half of renters paid less than $1,000 a month.
If you still pay less than $1,000 in rent, you’d be wise to stay put: Only 7.5% of apartment listings today have asking rents below $1,000.
The good news, according to the rental platform Rent., is that rents are essentially flat right now, on a national basis. Some cities, especially in the Sun Belt, have so much new construction that they now have excess supply. That means landlords are offering concessions to prospective tenants.
“We’re catching a break on the rental market right now, so that’s actually good news,” said Chen Zhao, economic research lead at Redfin. “I think that we will slowly chip away at the affordability issue.”
Some renters are moving from higher-priced cities in the West and Northeast to less expensive addresses in the South and Midwest, Bank of America Institute reports.
Other renters are “downgrading,” finding cheaper apartments in the same market, the report says.
Despite the uptick in rents, it’s still cheaper to rent than to buy in all of the 50 largest metropolitan areas, Bankrate reports. The typical mortgage payment is now $2,703, the report says, compared to a typical monthly rent of $1,979.
“As a renter, you are still paying less,” Ng said.
If your rent is unaffordable, find ways to cut
If you are paying more than 30% of your income on rent, finance experts say, you may be living paycheck to paycheck.
“It means making really hard decisions in other parts of your budget,” said Kimberly Palmer, a personal finance expert at NerdWallet.
The best way to cut costs, Palmer said, is to focus on high-cost expenses beyond the essentials: “things like your food eaten outside the home, any restaurant spending. The fun stuff.”
If you are renting, you’re missing out on the financial advantages of homeownership, including tax breaks and building home equity.
But that does not mean renters can’t build savings.
“The key is really finding space in your budget to save, even if it’s a small amount each month,” Palmer said. “Because then you’re building up that downpayment fund that you’d need to buy a home.”
Consider the strategy of “pay yourself first,” said McBride of Bankrate. Take automated deductions from your paycheck for retirement savings and emergency savings, with some of the funds potentially available to help toward a future down payment. If you have a surplus at month’s end, “that gives you a second bite at the savings,” he said.
You may even consider postponing saving for retirement and higher education, Palmer said, so that you can save aggressively toward a home purchase.
“It’s temporary,” she said. Once you buy the home, you can catch up on saving for everything else.