Spending

The 6 most affordable big US cities for renters

Tulsa, Oklahoma.
Twenty/20

Conventional wisdom suggests that you spend no more than 30% of your pretax income on housing every month, whether that's on rent or a mortgage payment. The federal government considers anyone who pays more than that to be "cost-burdened" — and that term describes a lot of people, especially those who live in big cities.

Some big cities, though, are friendlier to renters than others.

Big cities where it's most affordable to rent a home

To find the most affordable big cities in America, Grow used a recent analysis by property listing service RentCafé of the average rental prices in the country's 50 largest cities. We compared those costs to every city's median household income for renters in 2018, based on the Census Bureau's American Community Survey, and adjusted those numbers for inflation for 2019.

Both figures account for single people living alone in one bedrooms, as well as couples, families, and groups of roommates living together in larger spaces.

Only six cities met the "affordable" threshold, meaning that a typical renter would be able to spend 30% of their income or less on rent each month. Those cities are:

1. Tulsa, Oklahoma

Median household income for renters in 2019: $36,051
Average rent in 2019: $709 (23.6% of monthly income)

2. Wichita, Kansas

Median household income for renters in 2019: $32,643
Average rent in 2019: $665 (24.4% of monthly income)

3. Oklahoma City, Oklahoma

Median household income for renters in 2019: $37,887
Average rent in 2019: $782 (24.8% of monthly income)

4. Virginia Beach, Virginia

Median household income for renters in 2019: $56,281
Average rent in 2019: $1,221 (26% of monthly income)

5. Columbus, Ohio

Median household income for renters in 2019: $41,180
Average rent in 2019: $941 (27.4% of monthly income)

6. Omaha, Nebraska

Median household income for renters in 2019: $39,458
Average rent in 2019: $934 (28.4% of monthly income)

Across the rest of the areas analyzed, America's largest coastal cities stand out as some of the least affordable. Average rents in Miami, Los Angeles, and Oakland are all over 60% of the median renter income. That ratio is over 70% for Manhattan and Brooklyn. In Boston, which tops the list as America's most expensive city for renters, the average rent is a whopping 79%.

The 'spillover effect' makes some cities pricier than others

The cities that we found to be the most affordable tend to be both on the smaller side and farther away from the largest metro areas. That's because they are less influenced by "spillover effect," which occurs when a major city becomes unaffordable and a smaller city nearby attracts newcomers. The smaller city can become substantially more expensive, too.

Oakland and Sacramento are great examples of the spillover effect, says Irina Lupa, a research analyst and real estate writer at RentCafé. Both cities have absorbed people who work in, and were often priced out of, San Francisco and Silicon Valley. Oakland's rents more than doubled between 2010 and 2019, outpacing every other city for which data was available, including its notoriously expensive neighbor across the bay.

"Incomes lagged behind rents and home prices mostly in cities which expanded rapidly or were affected by the spillover effect," says Lupa. "If a large city is quickly growing in population while the rental stock is limited, supply can't keep up. Unless construction picks up in these markets, prices start rising."

If a large city is quickly growing in population while the rental stock is limited, supply can't keep up.
Irina Lupa
research analyst, RentCafé

Luxury apartments and 'renters by choice' drive up prices

The last decade saw a massive boom in apartment construction, much of which was targeted at high-earners: Forty percent of the 2.4 million apartments built in that time qualified as high-end, according to RentCafé. This has coincided with an increased number of "renters by choice," according to RentCafé: The number of high-earning households earning over $150,000 per year and still renting has more than doubled in the last decade.

Those trends have led to higher rents, which consume a bigger portion of the typical renter's income. In Phoenix, for example, rents have gone up by 71% since 2010 while renter income has increased by slightly less than half that. In that same time, more luxury units have popped up in the Phoenix metro area than nonluxury units.

Lupa notes that in several of Grow's top cities with affordable rent, a large proportion of available apartments have remained in the hands of lower and middle-class residents.

"It's a matter of supply and demand," she says. "If the apartment market can keep up with renters' needs, we're much more likely to see housing that accounts for less of residents' incomes."

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Cheaper rents alone don't make a city affordable

Relatively low rent prices by themselves aren't enough to make a city affordable. Residents also need healthy earnings to comfortably cover the costs.

Virginia Beach is the only city on Grow's list where the typical renter spends over $1,000 each month. In terms of dollars spent, that's nearly twice what renters spend in top-ranked Tulsa.

Virginia Beach renters also spend roughly the same amount of money each month as their counterparts in Milwaukee. The difference is that in Milwaukee, the typical renter spends 46% of their income on rent, nearly double the typical resident of Virginia Beach.

"When you look at the stats [on housing prices], you would say that Rochester and Buffalo are more affordable places to live: People can buy homes there. The median rent is pretty low," says Cea Weaver, campaign coordinator for Housing Justice for All, a New York-based advocacy group. "The thing about those cities is that the median income is really low too. And so by a lot of measures, Rochester is as unaffordable as New York City."

The data bears this out. Rochester's average rent of $1,052 is 49% of its median renter income, making it only slightly cheaper than Queens, where the average rent of $2,569 will eat up 54% of that borough's median renter income.

By a lot of measures, Rochester is as unaffordable as New York City.
Cea Weaver
campaign coordinator, Housing Justice for All

For many years, Rochester was the chief city for America's imaging industry, but that's been on the decline. Bausch & Lomb left in 2014 after 161 years; Xerox moved the last of its downtown employees to the suburbs in 2018; and Kodak is much smaller now than it was before the advent of digital photography. Like many smaller cities, Rochester doesn't have enough money in its budget to provide sufficient homeless services or build affordable housing, Weaver points out, when those companies leave.

Cities like Wichita and Omaha have struck a good balance, offering both jobs that pay well and rentals workers can generally afford. Koch Industries, the second-largest private company in America, is in Wichita, which ranks No. 3 on our list of the best metro areas for millennials to buy homes. Omaha, which is No. 4 on our homebuying list and No. 3 on our list of cities where millennials are doing the best financially, is home to Berkshire Hathaway, the fifth largest company in the world.

It's not always easy to predict how those cities, and others like them, will fare in the long term. Any place that depends too heavily on one company or industry puts itself at risk if that major employer decides to pack up and leave, but if it has well-paying jobs and a housing market that caters to the financial needs and realities of its residents, it should continue to be an affordable place to live.

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