Is the apartment poor? Many renters pay more than they can afford.

A new report says the typical American renter has to work 50 hours to pay rent.

This is a troubling finding, financial experts say. Fifty hours represents just over 30% of a month’s work in a 40-hour work week. And common sense dictates that American households shouldn’t spend more than 30% of their income on rent.

new analysisfrom the personal finance site Self Financial, found that the typical worker has to work more than a week at an average hourly wage of $34.59 to cover the average monthly rent of $1,733. It is based on census and federal labor data.

A personal finance rule of thumb that sets the threshold for “affordable” rent is that no one should spend more than 30% of their income on housing.

“Typically, the more you spend on essentials like housing, it means you have less in your budget for other things,” he said. Kara Ngsenior economist at Zillow.

However, Self Financial’s report identified many states where you’ll have to work, on average, more than 30% of the month to pay rent. The report looks at average rental rates and hourly wages to calculate how many work hours would be needed to cover rent in each state:

In California, where rent averages $2,493 per month, a tenant would have to work 64.5 hours at $38.63 per hour to pay rent.
In Florida, where the average monthly rent is $2,033, a tenant would have to work 63.5 hours at $32.01 per hour to pay rent.
And in Texas, where rent averages $1,720 per month, a tenant must work 52.9 hours at $32.54 per hour to pay rent.

Half of all renters pay ‘unaffordable’ rent

Data shows that more than 22 million American households spend at least 30% of their income on rent and utilities, a record high as of 2022. report for 2024 from the Joint Center for Housing Studies at Harvard University.

This means that half of all renters are paying more rent than they can afford.

Rents are also rising faster than incomes. Average rents rose 21% between 2001 and 2022, after inflation, according to Harvard. Over the same years, tenant incomes increased by only 2%.

Another Zillow report says the typical rental household will spend almost exactly 30% of their income (the affordability threshold) on rent in 2024.

As of September, rents were up 3.3% year over year. according to Zillow. Their report found that rents are rising annually in 49 of the 50 largest metropolitan areas.

According to Zillow, rents have risen by one-third since the start of the pandemic, meaning rents are rising faster than inflation.

“It’s the largest component of your household budget, and it’s where we’ve seen the most pronounced and consistent growth over the last four years or so,” he said. Greg McBrideBankrate’s Chief Personal Finance Analyst.

If you’re paying less than $1,000 in rent, stay put.

Meanwhile, cheap rents are falling. Only about a third of renters now pay less than $1,000 a month in rent, the lowest level ever, according to new Redfin report.

As recently as 2012, half of renters paid less than $1,000 a month, according to Redfin.

If you’re still paying less than $1,000 in rent, you’d be wise to stay put: Today, only 7.5% of apartment listings have asking rents of less than $1,000.

According to rental platform Rent., the good news is that rents are falling. almost flat nowon a national basis. Some cities, especially in the Sun Belt, have so much new construction that they are now oversupplied. This means that landlords offer concessions to potential tenants.

“We’re experiencing a breakthrough in the rental market right now, so that’s really good news,” he said. Chen ZhaoHead of Economic Research at Redfin. “I think we will gradually solve the affordability problem.”

Some renters are moving from expensive cities in the West and Northeast to less expensive addresses in the South and Midwest, Bank of America Institute. reports.

Other tenants are “downgrading” by finding cheaper apartments in the same market, the report said.

Despite rising rents, in all 50 major metropolitan areas, renting is still cheaper than buying. Bankrate reports. The report says the typical mortgage payment is now $2,703, compared to a typical monthly rent of $1,979.

“As a renter, you still pay less,” Ng said.

If your rent is unaffordable, find ways to cut it.

If you’re paying more than 30% of your income on rent, financial experts say, you may be living salary to salary.

“This means making really tough decisions in other parts of your budget,” said Kimberly Palmerpersonal finance expert at NerdWallet.

The best way to cut costs, Palmer says, is to focus on big-ticket expenses beyond the essentials: “things like food eaten out, any restaurant expenses. Fun stuff.

If you rent, you’re missing out on the financial benefits of homeownership, including tax benefits and increased equity.

But that doesn’t mean renters can’t save money.

“The key is to find room in your budget to save, even if it’s a small amount each month,” Palmer said. “Because then you’ll build that down payment fund that you’ll need to buy a home.”

Consider a “pay yourself first” strategy, said Bankrate’s McBride. Automatically deduct retirement and emergency savings from your paycheck, with some of the funds potentially used toward a future down payment. If you have a surplus at the end of the month, “that gives you a second slice of savings,” he said.

You might even consider saving for retirement and higher education so you can actively save for a home, Palmer says.

“This is temporary,” she said. Once you buy a home, you can save on everything else.