Housing costs continue to be a major concern for many Americans, with rent prices high and only getting higher. According to RentCafe, the average American now spends $1,748 on rent each month. That’s a hefty price tag, but some people pay much less — and others much more.
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GOBankingRates spoke to experts to figure out exactly what’s going on with rent in this country and where it’s headed. Here’s what we learned about rent prices across the U.S.
Regional Variations in Rent Prices
Marc Guberti, CPFC and Annuity.org expert, shared insights on the regional differences in rent prices.
“The average rent price varies considerably when factoring in details like location, property size, amenities and other factors,” he said. “While rent is rising throughout the country due to inflation, growth rates tend to be the worst in coastal cities. For instance, New York City rent has increased by 30.4% since 2019. Meanwhile, NYC wages are only up by 20.4% during the same time frame.”
Guberti pointed out that the Midwest offers more affordable options. “The Midwest region gives you the most mileage out of each dollar,” he explained. “While these states have fewer career opportunities than coastal cities, remote work has leveled the playing field and can attract more people to the region. North Dakota, Iowa, South Dakota, West Virginia and Kentucky each have average monthly rents below $1,000.”
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The Impact of High Rent on Financial Well-Being
Brandon Galici, CFP and founder at Galici Financial, emphasized the significant impact of housing costs on overall financial health. “Housing is typically the largest monthly expense for most Americans, and these high rental costs can directly impact your ability to save, pay down debt and spend money on things you enjoy,” he shared. “I often recommend keeping total housing costs (including utilities) under 30% of your gross monthly income, if possible.”
Galici provided a sobering perspective on the income required to comfortably afford the average rent. “Based on the $1,714 average rent and typical utility costs ($250 per month was the average I found on Apartment List), someone would need to earn around $78,000 per year to comfortably afford the average rental payment,” he said.
Strategies for Coping With High Rent Costs
If you’re struggling with high rent prices (and who isn’t?!), Galici offered some strategies:
- Increase your income: In high-cost-of-living areas, increasing your earning potential is important. “This could involve learning new skills to become more marketable for higher-paying jobs,” shared Galici. “Tactfully asking for a raise or promotion, or starting a side business, can also provide additional income to put toward housing costs and other goals.”
- Track your spending: Galici thinks people should start by monitoring their expenses without jumping right into a budget. “This approach is less overwhelming and more sustainable,” he said. “It’s similar to making gradual changes to your diet and exercise routine instead of radically overhauling it overnight.”
- Automate savings and build an emergency fund: “One of my favorite sayings is, ‘Can’t see it. Can’t spend it,'” Galici said. “Setting up automatic transfers ensures money is consistently going toward your priorities, like an emergency fund, before you have a chance to spend it. Having three to six months of living expenses saved can provide critical financial cushioning.”
The Current State of the Rental Market
Andrew Latham, CFP with SuperMoney.com, provided context on the current rental market. “As of August 2024, rental prices in the U.S. are 33.4% higher than before the pandemic,” he said. “However, there’s a silver lining: Rent inflation has significantly slowed down. In July 2024, rents were only 3.4% higher than the previous year, which is actually lower than the 4% average growth seen in July 2018 and 4.2% in July 2019.”
Latham also spoke of the benefits of renting versus buying. “Despite these high costs, renting a starter home remains cheaper than buying in all 50 of the largest metros, with renters saving an average of $1,067 per month compared to homeowners,” he shared. So, while some people think a starter home is an integral part of the American dream — it can be achieved through renting and not ownership.
Rent prices will continue to challenge many Americans’ budgets — there’s no getting around it. But armed with knowledge about what’s happening in the country, you can decide where and how you want to rent. In addition to increasing income, budgeting and saving, you can paint a holistic picture of your overall financial health.
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This article originally appeared on GOBankingRates.com: The Average American Spends This Much on Rent — See How You Stack Up
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