61% of renters can't afford the typical apartment

The majority of Americans, or 61%, can't afford to rent a typical apartment, a new study finds.

According to Redfin estimates, American families must earn $66,120 a year to spend no more than 30% of their income on housing costs, which include rent and utilities.

But that's $11,408 less than what these households earn on average, with the rents asked for by landlords now touching record highs.

To put these numbers into context, Redfin estimated that Americans had to make $53,800 to comfortably stay on top of bills before the pandemic.

Although rent growth has slowed in recent months, it has been outpacing wage increases for the past two years, said Redfin's senior economist Sheharyar Bokhari.

He added, "For a lot of folks, the math still won't check out. Many U.S. renters are and will remain burdened by the cost of having a roof over their head, and unlike homeowners, they're not building wealth through rising property values."

Despite this, rent demand remains high because many Americans can't afford to buy with record home prices and 7% mortgage rates.

A mixed picture

A median-priced apartment now costs $1,653 a month nationwide, but this doesn't reflect the huge disparities seen in metro areas across the country.

In New York, the typical renter earns 43.5% less than the $119,120 required for an apartment to be affordable—with Miami, Boston and Los Angeles also especially pricy.

The median asking rent now stands at $2,978 in New York. The year-on-year increase of 9.2% is one of the largest nationwide.

Back in February, figures from the New York Housing and Vacancy Survey revealed that the net vacancy rate had plunged to 1.4%, the lowest since 1968.

At the time, NYC Mayor Eric Adams said, "The data is clear: the demand to live in our city is far outpacing our ability to build housing. New Yorkers need our help, and they need it now."

And while his administration claims to be building "a record number of affordable homes," Adams said much greater action is needed to ensure the city "remains a viable home for working-class New Yorkers."

Overall, Redfin says renters meet affordability criteria in just five metro areas: Austin, Houston, Phoenix, Dallas, and Washington, D.C.

The falling rents in Austin are evidence of the positive impact that aggressive house building can have, with rising levels of supply helping to keep prices in check.

Fitch Ratings recently warned that elevated rents also prevent tenants from saving up for a downpayment and taking their first step onto the housing ladder.

Earlier this week, Treasury Secretary Janet Yellen said she was "pretty confident" that the rental market is cooling, and this will eventually feed through into inflation figures.

She joined Vice President Kamala Harris to unveil a $100 million fund for affordable housing, which is part of a wider plan to roll out two million units nationwide.