More US cities now require six-figure incomes to afford rent: Here's where

What to expect from the housing market in 2025

Corey Burr with Southeby's International Realty joined LiveNOW's Josh Breslow to talk about what to expect with the housing market in the new year.

SEATTLE - Affordability has become a growing problem for a number of renters across the U.S., according to Zillow. 

The real-estate marketplace company said today renters need to make more than $80,000 to comfortably rent homes. That number is up from $60,000 just five years ago.

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In eight major metropolitan areas, renters need to make six figures to afford rent, according to Zillow. 

By the numbers:

Zillow said since April 2020, rent for a typical U.S. apartment has gone up by 28.7%, to $1,858. Rent for a single-family home increased by 42.9%, to $2,256. 

A sign advertising units for rent is displayed outside of a Manhattan building on April 11, 2024 in New York City. (Photo by Spencer Platt/Getty Images)

However, over the years, the median household income has only risen by 22.5% to about $82,000.

In addition, the number of cities where renters need to earn $100K to afford rent has doubled since 2020.

What they're saying:

"Housing costs have surged since pre-pandemic, with rents growing quite a bit faster than wages," said Orphe Divounguy, senior economist at Zillow, said in a press release. "This often leaves little room for other expenses, making it particularly difficult for those hoping to save for a down payment on a future home. High upfront costs are often overlooked, which can keep renters in their current homes."

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Cities where rent is getting more expensive, affordable 

Dig deeper:

The average U.S. renter spends 29.6% of their income on rent, just under the 30% limit that marks rent as unaffordable. But in cities like San Jose, New York, Boston, San Diego, San Francisco, Los Angeles, Miami, and Riverside, California, renters usually need to make at least $100,000 a year to stay under that limit. Rents in these places are several hundred dollars higher than the national average of $2,024.

The number of markets where renters need to earn $100K to afford rent has doubled since 2020. (Credit: Zillow) 

In six of the eight cities, the average household would spend more than 30% of its income on rent. However, in San Jose and San Francisco, incomes have kept up better with rising rents. In San Jose, the average household spends 25% of its income on rent, and in San Francisco, it's 28%.

Even though rents have increased a lot in the past five years, many places are still affordable for average earners. 

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The most affordable cities are Buffalo (where you need $55K income), Oklahoma City ($56K), and Louisville ($57K). In these cities, renters spend 23% or less of their income on rent, giving them more room to save and build financial stability.

Challenges to affording rent 

High upfront costs make it harder for renters to move, especially in cities like New York and Boston. 

There, renters often have to pay broker fees along with security deposits and one or two months of rent in advance. 

However, things may get easier soon — New York City recently passed the FARE Act, and lawmakers in New York and Massachusetts are also looking at ways to reduce broker fees.