Last year wages grew faster than rents nationally and in almost half of major US metro areas — but the opposite was true in New York City, where the nation's largest gap emerged, according to a new analysis of rental data from Zillow and StreetEasy, along with wage data from the Bureau of Labor Statistics.
The study found that rents grew more than seven times faster than wages across New York City's five boroughs last year. That gap between rent growth (8.6%) and wage growth (1.2%) in New York City was larger than in any of the 50 biggest US metro areas.
"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,” says 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."
Another problematic market for renters is Florida, whose markets occupy three of the five spots where rent growth has most dramatically outpaced wage growth over the past five years. A surge in demand – fueled by robust migration to the state – has led to skyrocketing rents, while wages have struggled to keep up. Even in Miami, where wage growth has been slightly above the national average, a nearly 53% increase in rents — the most dramatic jump of any U.S. market — has left a huge gap between the income residents are earning and the income they need to comfortably afford the area's typical rental.
Since 2019, US rents have grown 1.5 times faster than wages, the study found. That trend cooled last year, as national rent growth (3.4%) was outpaced by wage growth (4.3%). Strong multifamily construction has helped absorb demand for apartments, keeping rent growth in check in much of the country.
Rents dipped in three markets last year — Austin; Portland, Oregon; and San Francisco — while wages continued to grow. In 20 other metros, rents grew, but wages grew faster, giving renters some breathing room.
Wages have consistently outpaced rents in recent years in only six major metros. The biggest gaps have been in San Francisco, San Jose and Houston.