Renter affordability has improved — here’s what’s behind the trend

The cost to rent is coming down faster in some areas of the U.S. than others. 

Overall, rent affordability is improving thanks to a combination of factors, said Daryl Fairweather, chief economist at Redfin. One is, there’s more supply.

“There are more apartments for rent now because there was a bit of a construction boom during the pandemic,” she said. 

With a higher rental inventory, landlords and property managers must lower their rent prices in order to compete with one another, Fairweather said. 

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Renters are also earning more, giving them more buying power.

In 2024, the median income among renters was $54,752, up 5.3% from $52,019 in 2023 and 35.2% higher from $40,505 in 2019, according to a recent report by Redfin.

Even so, that median income is still 14% below — or about $8,928 under — the amount tenants need to comfortably afford rent, the report found.

“The majority of renters are rent burdened,” said Fairweather, meaning tenants are spending more of their income than they should be on rental housing.

The Joint Center for Housing Studies at Harvard University defines a renter as “cost burdened” if they spend more than 30% of their income on rent and utilities.

Some areas in the U.S. may have more favorable rental market conditions, like a higher supply of newly built apartment buildings. Other areas, however, see more competition for available units and higher costs due to lower rates of building activity. 

Whether you’re apartment hunting or renewing your lease, here are the 10 places where rents are falling the most and the 10 places where costs are climbing higher.

Austin, Texas is No.1 among the “most affordable metros,” which Redfin defines as places where renters typically earn more money than they need in order to afford a typical rental unit. 

The typical renter in the area makes $69,781 annually, which is 25.14% higher than the $55,760 the site estimates is required to afford a typical apartment there.

Austin is followed by Houston; Dallas; Salt Lake City; Raleigh, North Carolina; Denver; Phoenix; Washington, D.C.; Baltimore; and Nashville. 

For the majority of these 10 metros, construction activity “mediated rents,” or increased the supply so much that prices moderated, Fairweather explained.  

“Waning demand” is also a factor, she said — there was a “boom in popularity” for places like Austin when remote work jumped during the pandemic, and people were moving to these locations. 

But now, the metro is “past the peak” of people migrating from New York for remote work as “people are back in the office,” Fairweather said. 

Therefore, the combination of new builds and less demand is bringing prices down, increasing affordability for renters, Fairweather said.

The metropolitan areas in the U.S. where prices remain high are areas where construction activity has not kept up with demand, resulting in lower supply available and higher costs, experts say.

“It’s a lack of new construction,” said Joel Berner, a senior economist at Realtor.com.

Providence, Rhode Island, made the top of Redfin’s list of least affordable areas because it’s within commuting distance of Boston, an “extremely unaffordable” area, Fairweather said. 

People in Boston tend to have a much higher income versus Providence residents.

The “spilled over” demand into Providence is pricing out locals, she said. And the city’s unable to build more housing to quench the need.

Major metros like Los Angeles, Miami, New York and San Diego are among the priciest areas in the U.S., because, on top of their limited supply, they’re areas with job opportunities and vibrant lifestyles that attract high earners, Fairweather said.

“Everything in the housing market is econ 101,” Berner said — as long as supply remains low, prices will stay high.