Rents have been rising in the U.S. over the past 20 years, and rent prices have now outpaced wage growth. The average share of household income spent on rent hit 30% in 2022, according to Moody's. Yahoo Finance Live's Rachelle Akuffo breaks down the report.
RACHELLE AKUFFO: Well, for the past 20 years, rents have been rising in the United States, so much so that rents have actually outpaced wage growth. Moody's found that the average share of household income spent on rent hit 30% in 2022. Now, that's the highest proportion in around 25 years. And it means that the average American household can now be classed as rent-burdened. That's according to data compiled by Zumper and "The Economist."
The discrepancy between the affordable studio wage, meaning the wage it would cost for someone to live comfortably in a single studio apartment, well, that's growing much wider than the median salary range. So this particularly prevalent in major US cities; New York tops the list, not too many surprises there, followed subsequently by Jersey City, Boston, and Miami. But this means that a humble studio apartment in a major city is well beyond the means of the average worker.
Wages as well as rental costs may vary across the country. But along with the quickly dwindling housing supply and rising mortgage rates, the housing market is certainly looking to be a long-term issue in the United States.