The landscape of rental affordability in the United States has seen a notable shift, with the income required to comfortably afford a median-priced apartment reaching its lowest point in three years. According to a December 2024 Redfin report, the necessary annual income stood at $63,680 to meet the median asking rent of $1,592. This represents a slight decrease of 0.4 percent compared to the previous year and a more significant drop of 6.4 percent from the peak observed in August 2022, when the median rent reached an unprecedented $1,700. This easing of the financial burden on renters signifies a potential turning point in a market that has been strained by escalating costs, particularly in the wake of the COVID-19 pandemic.
The context of this improved affordability is crucial. While the required income has decreased, the long-term impact of the pandemic’s inflationary pressures on rent remains evident. Rents at the end of 2024 were still substantially higher—20.9 percent higher—than they were five years prior, according to the Joint Center for Housing Studies at Harvard University. This persistent elevation underscores the lingering affordability challenges faced by many renters, particularly those in lower income brackets and communities of color. The U.S. Department of Treasury highlighted this disparity, reporting that nearly 90 percent of families earning less than $20,000 annually dedicated over 30 percent of their income to housing expenses in 2024—a proportion widely considered unsustainable.
Redfin’s analysis, based on median apartment asking rents and estimated median renter incomes in 44 major metropolitan areas, revealed a mixed picture of affordability across the country. While the typical renter earned enough to afford the median rent in 15 of these areas, significant regional disparities persisted. Texas cities like Austin, Dallas, and Houston emerged as havens of affordability, with median renter incomes exceeding the necessary income for a typical apartment by substantial margins. In contrast, cities like Providence, Rhode Island, Miami, Florida, and New York City presented a starkly different reality, where renter incomes fell significantly short of what was needed to comfortably afford housing. These contrasting realities highlight the uneven distribution of affordability challenges across the nation.
A key driver of the improved affordability landscape is the growth in renter incomes. The estimated median income for renters in 2024 reached $54,750, marking a 5.3 percent increase from 2023 and a substantial 35.2 percent jump from 2019. This income growth, coupled with relatively stagnant or slightly declining rents, has narrowed the gap between renter earnings and the income required for affordable housing. Redfin’s report highlights this positive trend, noting the smallest difference in these two metrics in the five years they have been tracked. However, despite this progress, the national median renter income still falls short of the required income for a median-priced apartment by 14 percent, underscoring the persistent affordability challenges for many.
Looking ahead, experts offer a range of perspectives on the trajectory of rental affordability. Sheharyar Bokhari, a senior economist at Redfin, anticipates continued improvement in 2025, driven by wage growth and relatively flat rents due to increased apartment construction. He also predicts a widening gap between rental and homeownership affordability due to rising home prices and persistently high mortgage rates, pushing potential homebuyers, particularly younger generations, to remain in the rental market for longer. However, Peyton Whitney, Research Analyst at the Joint Center For Housing Studies, cautions that the relief provided by new construction might be temporary due to recent declines in multifamily housing starts. She emphasizes the need for long-term solutions like increased rental subsidies, preservation of existing rental stock, and targeted construction subsidies for moderate- and lower-income households to address the underlying affordability crisis.
The evolving dynamics of the rental market suggest a complex picture for the future. While recent trends point towards improved affordability for renters, the legacy of pandemic-era price increases and regional disparities continue to pose significant challenges. The long-term affordability outlook hinges on various factors, including wage growth, housing construction trends, and policy interventions aimed at supporting renters, particularly those in vulnerable income brackets. The continued pressure of high housing costs is expected to influence housing decisions, potentially leading to prolonged periods of renting for many Americans, especially younger generations, adding further complexity to the already challenging housing market.
