Apartment rent-to-income levels are continuing along the same level trajectory they’ve enjoyed over the last decade, with median ratios staying at around 22% from 2010 to 2020 in professionally managed market-rate units, according to new data from RealPage.
The median household income for that property type clocked in at $65,000 in 2020, well above the median income of $42,500 among all renter housing types, The median rent-to-income ratio “also indicates lesser affordability challenges compared to other types of rentals,” RealPage notes, pointing out that recent data from Harvard’s Joint Center for Housing Studies suggests that about half of all renters nationally pay at least 30% of income on rent.
Rent growth in the sector has been offset by rising incomes for that category of units, and RealPage analysis of the decade-long data set reveals that affordability is inversely correlated with rent level.
“Renters in the most expensive units tend to spend the lowest share of income toward rent, while renters in cheaper units spend a somewhat larger share…however, the results should not be misinterpreted to suggest affordability problems do not exist,” the report notes. “Previous studies have conclusively shown challenges, but few have zeroed into differences among rental housing types.”
Affordability in the country’s 50 largest metros also varies very little, perhaps surprisingly. RealPage data shows that rent-to-income levels in professionally managed units in 2020 ranged from 17.8 in Pittsburgh to 25.1% in Riverside. Conversely, income levels vary drastically across metro areas, with the median household income for new lease signers in the property type reaching a high of $150,000 in San Francisco and $40,000 in Memphis and Greensboro/Winston-Salem.
Rent collections also remained high in professionally managed units, according to National Multifamily Housing Council data.
“RealPage’s analysis shows affordability is generally a non-issue in luxury rentals. But the real challenge is an environment that makes it exceedingly difficult for rental housing developers to build anything but high-rent luxury apartments – with restrictive zoning and NIMBYism rife throughout the country, further complicated by the high costs of development,” the report notes.