The renter-to-homeowner conversion is becoming a bigger ask for potential borrowers, as home prices remain high, mortgage rates hover around 7%, but rents continue to stabilize or even become more affordable.
As of December 2024, renters must earn $63,680 to afford the $1,592 of monthly, median asking rent for a U.S. apartment, according to a new analysis from real estate brokerage Redfin.
That is down 0.4% from December 2023, and a significant 6.4% drop from August 2022, when the median asking rent for a U.S. apartment reached an all-time high of $1,700, per Redfin data. At that time, renters had to earn $68,000 to afford the typical apartment, or over $4,300 more than they must earn today.
“The affordability gap between renting and buying is likely to widen further in 2025, as home prices rise and mortgage rates remain high. That means potential homebuyers – especially from younger generations – may decide to continue renting for longer, as it’s the only affordable option,” Sheharyar Bokhari, senior economist at Redfin, said in a press release.
Bokhari also noted that rental affordability is likely to continue improving this year, “as wages grow and rents remain flat, thanks to the recent boom in apartment construction.”
The Redfin report comes on the heels of another released yesterday by Rentometer that found the national average single-family rent growth slowed to roughly 0.8% in 2024, “the smallest increase in years.”
Redfin noted some of the most affordable places to rent in the country now are in Texas. They include:
- Austin, Texas, where median asking rent was $1,394 in December 2024 and estimated median renter income in 2024 was $69,781;
- Houston, Texas, where median asking rent was $1,239 in December 2024 and estimated median renter income last year was $58,287; and
- Dallas, Texas, where median asking rent was $1,460 in December 2024 and estimated median renter income in 2024 was $64,417.
Some of the least affordable rental markets now include Providence, Rhode Island; Miami, Florida; and New York, New York.
Although rental affordability is stabilizing or barely increasing, costs still spiked following the pandemic. For instance, according to Redfin’s data, a renter needed an income of just $54,000 to afford median asking rent for a U.S. apartment in December 2020, and $53,000 in December 2019 – around $10,000 less than they need now.
