showed that from 2005 to 2015, “post-rent wages,” or wages left after deducting median rent costs, decreased for service workers (-7 percent) and blue-collar workers (-5 percent), while only knowledge workers saw an increase (6 percent).
Nationwide, the growth in renter incomes has outpaced rent growth for the past few years, causing a decrease in the share of cost burdened renters.
Renters are significantly more cost-burdened than homeowners, with only 28.3 percent of homeowners spending 30 percent or more of their income on rent, compared to 49.7 percent of renters.
Only 11.1 percent of homeowners are severely cost burdened, less than half the rate for renters.
Although renters earn much less than homeowners, renter income has grown much faster than homeowner income.
From 2005 to 2016 renter income increased 7.3 percent, compared to just 1.4 percent for homeowners.
Homeowners tend to have higher median incomes, ,127 compared to ,264, and are more insulated to price changes once they have purchased a home and signed a mortgage.
Lower income and cost-burdened households are less likely to become homeowners, as it’s difficult to save enough for a downpayment.
During the recession, some moderately cost-burdened renters fell into the severely burdened category due to a job loss or pay cut.
Additionally, with nearly half of renters spending a third of their income on rent, and a quarter of renters spending half of their income on rent, rental affordability remains an important concern.
Cost-burden rates are driven by both changes in rent and changes in income, leading renters in some pricey cities, such as San Francisco and Austin, to fare better than renters in struggling metros, such as Chattanooga and Hartford.
At the metro level, the picture is more varied, with rent growth outpacing income growth in many metros.
In the metros that fall above the dotted line, income has grown faster than rents; below the dotted line, the opposite is true.