Rents Decrease in Pricey Metros, But Affordable Metros See Rent Hikes

Rents are dropping in the priciest neighborhoods of notoriously expensive metros, while more affordable areas are bumping up monthly rental rates, Zillow finds. Both changes are a sign of tightening housing affordability during a time when millions of renters across the country continue to struggle. Rents in pricey metros, such as New York, Boston, and San Francisco, were down year over year in February. But even with such declines, rent remains high. San Francisco’s 9.6% rent drop was not enough to bring rent down to a reasonable level. It remained at $3,380 per month, far more than the average U.S. rent.

The more-affluent renters in these areas could expect to spend 27% of their income on the local neighborhood rental, below the 30% threshold at which housing costs are deemed “unaffordable.”  But for renters in San Francisco’s least-expensive areas, rents fell just 1.8% over the past year, to an average of $2,461/month. This is still well above the national figure, and consumes a full third (33%) of local renters incomes in these areas — above the 30% affordability threshold and approaching a level at which housing insecurity and homelessness could be expected to rise more swiftly.

The trend is similar in other large, pricey metros. Rents in the wealthier neighborhoods of New York fell by 11.6% in February 2021 compared to the same time period in 2020, while rents in the least expensive neighborhoods actually rose by 1.8% over the same period. An increase in vacancies brought on by students and workers moving away from more-popular college areas and/or more-expensive downtown areas have contributed to declining rent in these places. 

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