Analysis: Rent Prices Outpacing Wage Growth in Majority of Major U.S. Cities

According to a recent analysis by Zillow and StreetEasy, rents have surged 30.4% nationwide between 2019 and 2023, while wages have only risen by 20.2% during the same period. This ten-point gap has created frustration among many Americans who are seeing their wage gains eroded by inflation.

In some cities, the gap between earnings and rent is especially stark. For example, in Tampa, rents have increased by 50% since 2019, while wages have only grown by 15.3%, making it the city with the widest gap. Similarly, Miami has seen rents skyrocket by 52.4%, outpacing wage growth of 20.4%.

Cities like Atlanta, Buffalo, Kansas City, Memphis, and Phoenix have also experienced rents accelerating much faster than wages since 2019. In some cities, below-average wage growth has been a major factor contributing to the disparity.

The affordability crisis in rent has left many families with nowhere to go, pushing a record number of people into homelessness. However, there is some good news as rent growth has moderated in the past year, and wages have started to increase faster than rent.

The report also highlights that the construction of multifamily buildings has helped absorb demand for apartments in cities like Austin, Houston, and Salt Lake City, where wages rose faster than rent in 2023. However, cities like New York City and Boston have seen rent growth outpacing wage growth.

Future Fed interest rate decisions could impact rent prices going forward, as higher interest rates have kept prospective homebuyers on the sidelines, tightening the rental supply. The Federal Reserve is expected to cut its key interest rate twice this year, starting in September, which could have an effect on the rental market.