Commercial Real Estate News / Insight / The States and Cities Where Rent Will Cost You the Highest Percentage of Your Income

The States and Cities Where Rent Will Cost You the Highest Percentage of Your Income

Published: 11-14-22 Category: Insight

Luke Williams

Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.

The pandemic not only forced many into remote work but also proved the viability of this new work style. And while the ripple of side effects it caused was largely positive, the housing market wasn’t so lucky.

People suddenly started moving to more desirable cities all over the country in 2020, 2021, and 2022, skyrocketing demand for multifamily housing in many places while outpacing supply and leading to significant rent hikes across the United States.

As a result, many Americans indicated an inability to keep up with these rising rental rates. And while the rate at which rents are increasing nationally seems to be slowing down, rental rates still increased year-over-year by 9% in September.

But despite this slowdown, wages haven’t kept up, resulting in very high percentages of income having to be allocated toward rent.

Using US Census Bureau data, our team of analysts conducted a report that shows the cities and states where rent will cost you the highest (and lowest) amounts relative to income.

In fact, our research shows that, in many places, the 30% rule (a budgeting rule of thumb that says no more than 30% of your monthly income should go towards rent or housing) has all but been thrown out the window due to necessity. Our data has found that, for many Americans, this long-regarded piece of advice isn’t possible anymore in many places in the US.

Key findings:

51% of Americans spend 30% or more of their income on rent, every single month.
More than 2 in 5 US renters (42%) spend 35% or more of their income on housing every single month.
61% of all metros in the country have more than 40% of residents that pay more than 35% of their income to rent.
In some cities (like Sebastian-Vero Beach, in Florida) 61% of residents pay more than 35% of their income on rent.
13% of the country pays less than 15% of their income to rent.

Let’s dive into the specifics of the report.

National Percentages of Income That Go to Rent

% of Income That Goes To Rent	% of People
Less than 15.0%	13%
15.0 to 19.9%	12%
20.0 to 24.9%	13%
25.0 to 29.9%	12%
30.0 to 34.9%	9%
35.0% or more	42%

Overall, 49% put less than the golden rule of 30% or less of their monthly income towards rent.

However, this leaves 51% of people in the country using more than 30% of their income to pay rent. Additionally, 42% of the country puts more than 35% of their income toward monthly rent. This data shows that almost half of the country is financially burdened by rent.

From this data, we wanted to find which metros with a population higher than 50,000 pay the highest percentage of their income towards rent. Here is what we found.

Cities Where Rent Will Cost You the Highest Percentage of Your Income

Sebastian-Vero Beach, FL (61% of residents spend more than 35% of their income on rent);
Hammond, LA (58%);
Bloomington, IN (57%);
Auburn-Opelika, AL (56%);
East Stroudsburg, PA (55%);
Valdosta, GA (55%);
Port St. Lucie, FL (54%);
Miami-Fort Lauderdale-Pompano Beach, FL (54%);
Casper, WY (54%); and
Hilton Head Island-Bluffton, SC (54%).

Top 50 Most expensive Cities to Rent Relative to Income

Rank	Metro	35% or More of Income To Rent	15.1% to 34.9% of Income to Rent	15% or Less of Income To Rent
1	Sebastian-Vero Beach, FL	61%	35%	4%
2	Hammond, LA	58%	33%	8%
3	Bloomington, IN	57%	34%	9%
4	Auburn-Opelika, AL	56%	31%	13%
5	East Stroudsburg, PA	55%	32%	13%
6	Valdosta, GA	55%	36%	9%
7	Port St. Lucie, FL	54%	38%	7%
8	Miami-Fort Lauderdale, FL	54%	39%	7%
9	Casper, WY	54%	36%	11%
10	Hilton Head Island-Bluffton, SC	54%	32%	14%
11	Punta Gorda, FL	53%	41%	6%
12	Corvallis, OR	52%	38%	10%
13	College Station-Bryan, TX	52%	38%	11%
14	Saginaw, MI	52%	36%	12%
15	Monroe, LA	52%	32%	16%
16	Naples-Marco Island, FL	52%	38%	10%
17	Vineland-Bridgeton, NJ	51%	41%	8%
18	Kahului-Wailuku-Lahaina, HI	51%	39%	10%
19	Ocean City, NJ	51%	36%	13%
20	Gainesville, FL	51%	41%	9%
21	New Orleans, LA	50%	40%	10%
22	Barnstable Town, MA	50%	42%	8%
23	Grants Pass, OR	50%	31%	19%
24	St. George, UT	50%	37%	13%
25	Tallahassee, FL	50%	40%	11%
26	Bakersfield, CA	50%	40%	11%
27	Orlando-Kissimmee-Sanford, FL	50%	44%	6%
28	Vallejo, CA	50%	43%	7%
29	Madera, CA	49%	43%	8%
30	Palm Bay-Melbourne-Titusville, FL	49%	43%	7%
31	Chico, CA	49%	42%	9%
32	Greenville, NC	49%	39%	11%
33	Las Vegas-Henderson-Paradise, NV	49%	41%	10%
34	Los Angeles-Long Beach-Anaheim, CA	49%	42%	9%
35	Beckley, WV	49%	45%	7%
36	Cape Coral-Fort Myers, FL	49%	44%	8%
37	Ithaca, NY	49%	43%	8%
38	Baton Rouge, LA	49%	38%	13%
39	Atlantic City-Hammonton, NJ	48%	41%	11%
40	Boulder, CO	48%	44%	8%
41	Santa Maria-Santa Barbara, CA	48%	43%	9%
42	Gainesville, GA	48%	41%	11%
43	Morgantown, WV	48%	42%	10%
44	San Luis Obispo-Paso Robles, CA	48%	42%	10%
45	Riverside-San Bernardino-Ontario, CA	48%	44%	9%
46	San Diego-Chula Vista-Carlsbad, CA	48%	45%	7%
47	Urban Honolulu, HI	48%	44%	9%
48	Waco, TX	48%	45%	7%
49	Florence, SC	48%	35%	17%
50	Lake Havasu City-Kingman, AZ	47%	43%	10%

The results varied for which cities pay most of their personal finances towards rent. This could be due to various reasons such as low income, high rent, location, apartment demand and supply, and a combination of these factors.

Florida had many cities rank in the top 50. For example, the demand for housing in Miami is among the largest in the nation, especially after the pandemic. A fixed supply of housing and high demand forces higher rent, leading to more individuals paying more than 30% of their monthly budget in rent and other housing costs.

Due to lower wages, cities like Hammond, Louisiana; Bloomington, Indiana; and Auburn-Opelika, Alabama also saw high rents relative to income. For example, Auburn has a median household income of $49,028 per year, with 26% of persons living in poverty. Those are some of the lowest median wages and highest poverty levels in the country.

On the flip side, we found which cities pay the least amount of their income towards rent. Here is what we found.

Cities Where Rent Will Cost You the Lowest Percentage of Your Income:

Jefferson City, MO (28% of people spend 15% or less of income on rent);
Elizabethtown-Fort Knox, KY (26%);
Farmington, NM (26%);
Kankakee, IL (25%);
Appleton, WI (23%);
Owensboro, KY (23%);
Springfield, OH (23%);
Brunswick, GA (23%);
Columbus, IN (23%); and
Sioux City, IA (23%).

Top 50 Most Affordable Cities to Rent Relative to Income

Rank	Metro	15% or Less of Income To Rent	15.1% to 34.9% of Income to Rent	35% or More of Income To Rent
1	Jefferson City, MO	28%	46%	27%
2	Elizabethtown-Fort Knox, KY	26%	43%	32%
3	Farmington, NM	26%	41%	33%
4	Kankakee, IL	25%	42%	33%
5	Appleton, WI	23%	48%	28%
6	Owensboro, KY	23%	42%	35%
7	Springfield, OH	23%	49%	27%
8	Brunswick, GA	23%	42%	35%
9	Columbus, IN	23%	49%	28%
10	Sioux City, IA	23%	45%	32%
11	Rome, GA	22%	45%	32%
12	Florence-Muscle Shoals, AL	22%	48%	29%
13	Green Bay, WI	22%	44%	34%
14	Lebanon, PA	22%	52%	26%
15	Bay City, MI	22%	45%	34%
16	Bowling Green, KY	22%	40%	39%
17	Hickory-Lenoir-Morganton, NC	21%	49%	29%
18	Pocatello, ID	21%	44%	35%
19	Evansville, IN	21%	45%	34%
20	Dalton, GA	21%	49%	30%
21	Scranton--Wilkes-Barre, PA	21%	44%	35%
22	Fargo, ND	21%	46%	33%
23	Wheeling, WV	21%	37%	42%
24	Sheboygan, WI	21%	49%	30%
25	Blacksburg-Christiansburg, VA	20%	37%	42%
26	Roanoke, VA	20%	43%	37%
27	Fayetteville-Springdale-Rogers, AR	20%	54%	27%
28	Janesville-Beloit, WI	20%	49%	32%
29	Springfield, IL	19%	42%	39%
30	Oshkosh-Neenah, WI	19%	51%	30%
31	Warner Robins, GA	19%	38%	43%
32	Lewiston, ID	19%	38%	43%
33	Odessa, TX	19%	41%	40%
34	Utica-Rome, NY	19%	46%	35%
35	New Bern, NC	19%	44%	37%
36	Texarkana, TX	19%	41%	40%
37	Grants Pass, OR	19%	31%	50%
38	Toledo, OH	19%	45%	36%
39	Victoria, TX	19%	50%	31%
40	Fort Smith, AR	19%	48%	33%
41	Michigan City-La Porte, IN	19%	49%	32%
42	Johnstown, PA	19%	45%	37%
43	Chambersburg-Waynesboro, PA	18%	47%	35%
44	Muncie, IN	18%	45%	37%
45	Bloomington, IL	18%	50%	32%
46	Enid, OK	18%	43%	38%
47	Davenport-Moline-Rock Island, IA	18%	44%	38%
48	Rocky Mount, NC	18%	48%	34%
49	Sierra Vista-Douglas, AZ	18%	36%	45%
50	Decatur, AL	18%	50%	32%

Jefferson City, Missouri; Elizabethtown-Fort Knox, Kentucky; and Farmington, New Mexico are the cheapest places to rent compared to income. In the top 10 least expensive states, more than 20% pay less than 15% of their income to rent.

States Where Rent Will Cost You the Highest Percentage of Your Income:

Florida (49% pay more than 35% of their income to rent);
Louisiana (48%);
Hawaii (47%);
California (46%);
Nevada (46%);
New York (44%);
Delaware (44%);
Mississippi (43%);
New Jersey (43%); and
Colorado (43%).

Almost half the renters in Florida put more than 35% of their income toward rent. With the influx of working from home, many flocked to Miami, Fort Lauderdale, and Pompano Beach away from expensive tech hubs. In South Florida, for example, rents increased by 25% between July 2021 and July 2022 to an average of $2,841 per month, one of the highest spikes in rent in the country.

Louisiana is the second most-expensive state to rent compared to household income. This is due to lower wages in the state. The typical household in Louisiana makes $52,087 per year. This is the third-lowest median household income in the country, $17,630 less than the national median.

Hawaii is the third most-expensive place to rent relative to income. A recent survey showed that 47% of residents blamed Hawaii’s cost of living as the main reason for their relocation. On net, 12,000 Hawaiian residents left the state in 2021. The state has the highest housing costs, highest grocery bills, electricity, transportation, and highest income taxes in the country.

States Where Rent Will Cost You the Lowest Percentage of Your Income:

North Dakota (22% pay less than 15% of income to rent);
Montana (20%);
South Dakota (19%);
Wisconsin (17%);
Iowa (17%);
Arkansas (17%);
Kentucky (16%);
New Mexico (16%);
Ohio (16%); and
Kansas (16%).

North Dakota, South Dakota, and Montana tend to hold the most value for renters. These states have a low cost of living and high income per capita. For example, in North Dakota, 22% put less than 15% of their income toward rent. North Dakota has a median household income of $65,315, the 19th-highest in the country. Additionally, according to Bestneighbordhood.org, the average rent in North Dakota is about $999 per month. That is within the 15th percentile compared to the national average of $1,385.

Top 5 States With the Highest Number of the Most Expensive Cities to Rent Relative to Income

California (18 cities ranked in the top 100 most expensive);
Florida (15 cities);
Louisiana (7 cities);
Michigan (6 cities); and
New Jersey (4 cities).

California, Florida, and Louisiana have the most metros with a population of over 50,000 which are the most expensive places to rent compared to income.

California has 18 cities that are ranked in the top 100 most expensive cities to rent. The most expensive cities in California are high-demand coastal areas.

Second is Florida, with 15 cities ranked most expensive to rent compared to income. The same theme in Florida is found in California as people tend to gravitate toward coastal cities.

Louisiana is third, with 7 cities ranked in the top 100. While rent is lower in Louisiana at a median average price of $876 (ACS) and $1,395 (Zillow), income is lower as discussed above.

Top 5 States With the Highest Number of Least Expensive Cities to Rent Relative to Income:

Wisconsin (10 cities ranked in the top 100 least expensive);
Pennsylvania (9 cities);
Ohio (8 cities);
Indiana (7 cities); and
North Carolina (6 cities).

Wisconsin, Pennsylvania, and Ohio house the most cities where it is the least expensive to rent relative to household income. Wisconsin has 10 metros within the top 100 least expensive places to rent. Pennsylvania has 9 cities, and Ohio has 8 eight cities within the top 100 least expensive places to rent compared to income.

The main issue here is the cost of living keeps increasing while wages are increasing at a much slower pace. As housing costs have soared and wages increased at a much lower rate, the gap keeps increasing.

While rents have cooled off a bit over the last few months, inflation sits at an all-time high. As of late, higher costs of regular goods such as groceries and gasoline have taken a larger bite of personal finances. This leaves millions choosing between food on the table or making monthly rent. With so many paying more than 35% of their income to rent already, is it a question of a “new reality” or “new normal,” where 35% of income that is paid to rent is now commonly accepted?

Methodology:

To find which cities and states pay the most and least percentage of their income towards rent, we analyzed the US Census Bureau’s American Community Survey. We used data on gross rents as a percentage of household incomes for all the states and metros above 50,000 population.

To find the ranking for those who pay most of their income to rent, we found the percentage of people in each metro that pays more than 35% of their income towards rent. We then ranked the top 50 cities that are the most expensive to rent relative to income. To find which states and cities are most affordable relative to rent and income, we ranked the percentage of people who pay less than 15% of their income to rent.