Soaring rents have created a new hurdle for apartment owners and operators across the country. It’s now much tougher to find qualified renters to fill their vacant units. Income and wage growth have struggled to keep pace with the double-digit rent increases that many metros have experienced. Over the past two years, the average national rent has grown nearly 16% while wage growth has lagged at 4%1.
The growing gap between rent and income growth means that renters are having a more difficult time meeting standard application qualifications. In New York City, for example, annual average rents on a studio apartment have jumped 17% to $3,2002. For owners and operators in New York that require an applicant’s gross income to meet or exceed 40x the monthly rent, that would mean that they’re now searching for individuals or co-tenants that earn upwards of $128,000 per year. Although rent increases are slowing, other major metros saw similar spikes in rents last year, including Seattle at 17.1%, Miami at 13.3% and Boston at 11.8%3