Editor’s Note: This story originally appeared on SmartAsset.com.
Residential insecurity and a lack of protection from evictions have become even more pressing due to the COVID-19 pandemic.
According to a March 2021 report by the Federal Consumer Financial Protection Bureau (CFPB), an estimated 8.8 million renting households were behind on their rent payments as of December 2020. Staying ahead and completing rent payments can be particularly challenging in areas where Rent – the income ratio is high.
The US Department of Housing and Urban Development (HUD) recommends a rent-to-income ratio of less than 30% and considers households that spend more than 30% of their pre-tax income on housing burdened with housing costs. Using HUD guidelines, SmartAsset examined the income needed to pay rent in America’s largest cities in this study.
Specifically, we set a 28% rent-to-income ratio and calculated the income that renters would need to afford the average rent for a one- or two-bedroom apartment in the 25 largest US cities.
This is SmartAsset’s seventh study on the income needed to pay rent in America’s largest cities. Read the 2020 edition here.
Although we have calculated the necessary income for each of the one- and two-bedroom apartments, the cities are ranked on the last number.
For details on our data sources and analytics, check out the Data and Methodology section at the end.
Below is the income needed to pay rent in the 10 largest US cities.
1. San Francisco, California
Zumper data shows that the average monthly rent for a two-bedroom apartment in San Francisco is $3,668 (more than $44,000 annually).
Assuming a maximum rent-to-income ratio of 28%, San Francisco renters would need to earn $157,218 annually to avoid being burdened with housing costs.
For comparison, the median household income in San Francisco is less than $124,000.
2. Washington, DC
The income needed to rent a two-bedroom apartment in Washington, D.C. is $120,457.
The average monthly rent in this city for a two-bedroom apartment is $2811, which equates to $33,728 per year.
While the median household income in the city ($92,266) isn’t enough to cover that amount, it’s enough to afford the income needed for a one-bedroom apartment ($87,893).
3. New York, New York
For a one- or two-bedroom apartment in New York City, families would need an annual income of $108,789 or $119,189, respectively.
The median monthly rent for a one-bedroom apartment in New York City is $2,538 or $30,461 per year.
Meanwhile, the average monthly rent for a two-bedroom apartment in the Big Apple is $2,781 or $33,373 per year.
4. Los Angeles, California
In Los Angeles, average monthly rents are $1,990 for a one-bedroom apartment and $2,746 for a two-bedroom condo.
In order to purchase a two-bedroom apartment without burdening rent, the family would need an annual income of $117,686 or more than $9,800 per month.
5. San Jose, California
According to Census Bureau data, the median household income in San Jose, California is $115,893.
That’s about $200 more than the income needed to rent a two-bedroom apartment, $115,668 (assuming rental costs don’t exceed 28% of income).
The average monthly rent for a two-bedroom apartment in San Jose is $2,699 or $32,387 per year.
6. Boston, Massachusetts
In Boston, the average monthly rent for a two-bedroom is $2,648 and the median monthly rent for a one-bedroom is $2,179.
This means potential renters could save nearly $900 a month if they’re looking for a two-bedroom room and live with a roommate.
In order to avoid incurring housing costs and continuing to pay the $31,781 rent for a two-bedroom apartment, a family in Boston would need to earn $113,504 annually.
7. San Diego, California
In San Diego, the average two-bedroom rent is $2,394 per month, or $28,723 per year.
A family in a West Coast city would need $102,582 to afford that amount.
By comparison, the median household income in San Diego is about $85,500, or about 17% less.
8. Seattle, Washington
Seattle is the first city on our list that requires less than six figures to cover the annual rent of a two-bedroom apartment.
The median annual rent for a two-bedroom apartment in the city is $24858, which means families need to earn about $88,800 annually.
9. Denver, Colorado
The median monthly rent for a two-bedroom apartment in Denver is $1919.
This comes to $23,027 over one year. The household income needed to afford this apartment and avoid bearing the cost of housing is $82,239.
The median household income in Denver is about 8% lower, at $75,646.
10. Chicago, Illinois
In Chicago, a family would need $1,797 per month (or $21,568 annually) to cover the rent for a two-bedroom apartment.
Assuming no more than 28% of the income goes to housing costs, the household would need $77,029 to pay the rent for a year.
This number exceeds the median household income in Chicago, which is $61,811.
Data and methodology
To find the income needed to pay rent in America’s largest cities, SmartAsset looked at data for the 25 largest cities in America. We estimated that renters who receive income from the household would need to bear the cost of a one- or two-bedroom apartment while paying no more than 28% of their total pre-tax rental income.
To find these numbers, we divided both the average annual cost of a one- and two-bedroom apartment by 0.28. The resulting figures are the annual income needed for rental costs equal to 28% of the household’s income. We ranked cities from highest to lowest based on the income needed to pay rent for a two-bedroom apartment.
Average rent of one and two bedrooms starting from Zumper and for July 2020 through June 2021.
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