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As Rental Costs Rise and Wage Growth Slows, Housing Affordability Worsens

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As Rental Costs Rise and Wage Growth Slows, Housing Affordability Worsens

Homebuyers and renters continue to be priced out of an increasingly unaffordable housing market

January 31, 2023
Hand holding a single home amid a pile of money
Image: d_odin / stock.adobe.com

For the past two years, renters across the U.S. have been squeezed by fast-rising rental costs paired with near-stagnant income growth, and as a result, two full-time workers earning minimum wage can comfortably afford a typical two-bedroom rental in just 10 of the 50 largest U.S. cities, Forbes reports. In San Francisco, home to the highest one-bedroom rents in the country, an hourly income of $49.01 is needed to reasonably afford a typical one-bedroom rental.

Though builders are taking on more projects in the year ahead to increase supply and lower housing costs, increasing the total number of housing units across the U.S. only solves one part of the problem. Rising inflation and slow wage growth continue to price homebuyers and renters out of an increasingly unaffordable market.

There are six cities where at least four full-time minimum wage incomes would be needed to reasonably afford a two-bedroom rental: Austin, Atlanta, Nashville, Dallas, Charlotte, North Carolina and Raleigh, North Carolina. All use the federal minimum wage of $7.25 an hour and have been among the hottest housing markets in the country in recent years. Charlotte, Dallas, Nashville and Atlanta are also among Zillow's hottest markets for 2023, making it likely that affordability will become even tighter in those markets.

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