Americans spent 30% of their monthly budgets on rents in February, a percentage that most financial experts consider debt-burdened for households. In 14 of the 50 metros tracked, rents accounted for an even higher portion of household incomes, led by Sun Belt metro areas like Miami, Tampa, Fla., and San Diego, according to realtor.com®’s Monthly Rental Report.
The U.S. median rental price nationwide jumped to a new high of $1,792 in February. That is up 17.1% year over year.
“Whether it’s rent or mortgage payments, the general rule of thumb is to keep monthly housing costs to less than 30% of your income,” says Danielle Hale, realtor.com®’s chief economist. “And with rents surging nationwide, February data indicates that many renters’ budgets may be stretched beyond the affordability limit. With rents up nearly 20% over the past two years, rental prices are likely to remain high, but we do expect some cooling from the recent accelerated pace.”
Economic uncertainties and the conflict in Ukraine could motivate more households to learn toward homeownership to lock in a fixed monthly payment in an effort to curb inflation, Hale says. However, fast-rising mortgage rates and limited housing stock for sale could leave some households with no other choice but to continue renting.
Further, “with rental demand already outmatching supply, rental affordability will remain a challenge,” Hale says. “For renters eager to make the transition to first-time buying, finding a relatively affordable rental is key to saving for a down payment.”
The following chart shows the least affordable rental markets in February, according to realtor.com®’s report.