U.S. rent prices have increased by 30.4% since 2019, significantly outstripping wage growth, which rose by only 20.2% during the same period, according to a new analysis.
Millennials, Gen Z Demand
Rental costs have escalated due to high demand from millennials and Generation Z, who are renting more extensively and for longer durations than previous generations. This trend, combined with a nationwide housing shortage, has accelerated rent increases. But it’s not only young people who are renting: Solo renters age 50+ are way up.
The new research findings were based on data from Zillow, StreetEasy and the Bureau of Labor Statistics.
New York City, Miami
The disparity between rent and wage growth was particularly pronounced in New York City, where rents last year grew over seven times faster than wages — the largest gap observed in the nation. New York City rents were up 8.8% in 2023 compared with 2022, vs. a 1.4% increase in wages, the research found.
“Despite a strong job market in the city, and in some ways because of it, the gap between what a typical renter can afford and the price of rentals on the market is growing,” said StreetEasy Senior Economist Kenny Lee. “New multifamily buildings coming online has eased competitive pressure in many markets, but in New York City, construction just simply can’t keep up with demand.”
The analysis also highlights that Florida cities are struggling with rent growth vastly outpacing wage increases, attributed to the state’s popularity as a migration destination during the pandemic. Miami witnessed an extreme case where rents surged nearly 53% from 2019-2023, further exacerbating the affordability crisis.
In the U.S., only six major metro areas saw wages consistently outgrowing rents during the five-year period, with San Francisco, San Jose, and Houston leading this group. The overall national trend shows some regions beginning to see wage growth that could potentially alleviate the strain of rising rents, offering a glimmer of hope for many American renters.
Rents Cool, Overall
But in the United States overall last year, the trend of rent increases outstripping wage gains began to cool. Wages grew 4.3%, outpacing rent growth, at 3.4%. Wages caught up last year nationally and in about half of major metros, Zillow said. In contrast, cities like Austin, Portland, and San Francisco experienced a drop in rents while wages grew, providing some relief.
Strong multifamily construction has helped absorb demand for apartments, Zillow said, keeping rent growth in check in much of the country.
Rents Surge in Most Markets
