SAN FRANCISCO, May 9, 2019 /PRNewswire/ -- Rising rents and slow
income growth are making it harder for early-career renters to
afford housing, according to a new
HotPads® analysisi. In fact, the rent burden has
grown more quickly for recent college graduates in 45 majors –
including U.S. history, music, biology and early childhood
education – than it has for renters without a four-year degree.
The current U.S. median rent is $1,535 per month, up 29.9 percent over the past
10 years. In that time, the median income for early-career renters
has grown 14.4 percent – the current median annual income is
$40,673 for early-career renters with
a four-year degree and $24,298 for
those without one. The amount of student debt in the United States has also more than doubled
in the last 10 yearsii – 62 percent of 18- to
29-year-old Bachelor's degree graduates took on debt for their
education in 2018, according to the Federal
Reserveiii.
As rent prices outpace incomes, the rent burden has gotten worse
– a typical recent graduate would have to spend 45.3 percent of his
or her income to pay the median rent, up from 40.5 percent in 2009.
A typical renter without a four-year degree would spend 75.8
percent of each paycheck on the median rent, up from 67.9 percent
in 2009.
While non-graduates have a higher rent burden than four-year
college graduates, some degrees have had slower income gains – or
even decreases – in the past decade. For renters with these
degrees, housing affordability is deteriorating faster than it is
for renters who didn't graduate from a four-year college.
U.S. history graduates have seen one of the largest changes in
rent affordability in the past 10 years – their rent burden has
grown by 22 percentage points as their early-career median annual
income dropped 14.5 percent. Recent graduates with music, biology
and early childhood education degrees have seen less than 10
percent increases in their incomes over the past 10 years, and
their rent burden grew by more than 10 percentage points in that
time frame.
Experts typically recommend spending no more than 30 percent of
annual income on housing. Nationally, only early-career graduates
with one of 17 majors analyzed – including computer science and
various engineering degrees – have a rent burden of 30 percent or
less.
10 College Majors
with the Smallest Rent Burdens
|
Rank
|
Major
|
Median
Entry-Level
Income
|
Rent Burden,
2019
|
1
|
Mining and Mineral
Engineering
|
$75,854
|
24.3%
|
2
|
Materials Engineering
and Materials Science
|
$69,963
|
26.3%
|
3
|
Applied
Mathematics
|
$68,669
|
26.8%
|
4
|
Computer
Engineering
|
$68,669
|
26.8%
|
5
|
Electrical
Engineering
|
$68,669
|
26.8%
|
6
|
Aerospace
Engineering
|
$67,613
|
27.2%
|
7
|
Mechanical
Engineering
|
$66,556
|
27.7%
|
8
|
Industrial and
Manufacturing Engineering
|
$65,503
|
28.1%
|
9
|
Computer
Science
|
$65,500
|
28.1%
|
10
|
Nuclear
Engineering
|
$63,646
|
28.9%
|
10 College Majors
with the Largest Rent Burdens
|
Rank
|
Major
|
Median
Entry-Level
Income
|
Rent Burden,
2019
|
1
|
Studio
Arts
|
$24,217
|
76.1%
|
2
|
Counseling
Psychology
|
$24,568
|
75.0%
|
3
|
Linguistics and
Comparative Language and
Literature
|
$25,824
|
71.3%
|
4
|
Humanities
|
$26,212
|
70.3%
|
5
|
Miscellaneous Fine
Arts
|
$26,411
|
69.7%
|
6
|
Music
|
$26,411
|
69.7%
|
7
|
Drama and Theater
Arts
|
$26,411
|
69.7%
|
8
|
Ecology
|
$26,577
|
69.3%
|
9
|
Industrial and
Organizational Psychology
|
$26,689
|
69.0%
|
10
|
Botany
|
$27,789
|
66.3%
|
As renters spend more of their income on housing, many of them
have found ways to cut back on expenses to lower their rent burden,
such as getting roommates or moving back home with their
parents.
"As rent prices and student debts rise, affordability concerns
for recent college graduates have garnered attention on the
national stage," said Joshua Clark,
economist at HotPads. "Graduating from college still typically pays
off in the long run, but slower wage growth for college graduates
and rising costs have dampened the immediate financial benefits
associated with a four-year degree. As renters consider their
career interests and their short-term costs of living, where and
how they live post-graduation can have more of an impact on their
finances now than ever before."
Of the 50 largest metro areas, Sacramento had the most significant change in
rent affordability for four-year college graduates in the past
decade. In 2009, the rent burden for an early-career graduate in
Sacramento was 47 percent; now
it's 75.9 percent. The median rent in Sacramento rose 46.4 percent over the past 10
years, while the median income for early-career graduates fell 9.4
percent.
For early-career renters without a four-year degree, high-cost
California markets have grown
increasingly unaffordable over the last 10 years. Even in 2009,
early-career renters without a four-year degree would have needed
to spend more than 100 percent of their income to pay the median
rent alone in San Francisco,
San Jose or Los Angeles. Today, they would need to spend
more than 150 percent of their income to live alone in a typical
rental in one of these metro areas.
For more information on this analysis, including data on
additional college majors at the metro level, visit
HotPads.com.
|
|
Early-Career
Four-Year
College Graduates
|
Early-Career, No
Four-
Year Degree
|
Metropolitan
Area
|
Median
Rent
|
Rent Burden,
2009
|
Rent Burden,
2019
|
Rent Burden,
2009
|
Rent Burden,
2019
|
United
States
|
$1,535
|
40.5%
|
45.3%
|
67.9%
|
75.8%
|
New York,
NY
|
$2,380
|
55.7%
|
60.1%
|
103.2%
|
117.5%
|
Los Angeles-Long
Beach-Anaheim, CA
|
$2,965
|
64.6%
|
88.6%
|
123.3%
|
153.1%
|
Chicago,
IL
|
$1,790
|
44.2%
|
50.6%
|
83.9%
|
84.7%
|
Dallas-Fort Worth,
TX
|
$1,690
|
36.9%
|
45.7%
|
74.1%
|
76.8%
|
Philadelphia,
PA
|
$1,690
|
45.0%
|
48.0%
|
72.5%
|
76.8%
|
Houston,
TX
|
$1,585
|
35.5%
|
41.1%
|
71.1%
|
75.0%
|
Washington,
DC
|
$2,180
|
53.8%
|
51.6%
|
93.4%
|
103.2%
|
Miami-Fort
Lauderdale, FL
|
$2,035
|
55.4%
|
77.1%
|
88.6%
|
105.1%
|
Atlanta,
GA
|
$1,490
|
36.0%
|
42.3%
|
64.8%
|
76.9%
|
Boston, MA
|
$2,425
|
52.7%
|
61.2%
|
91.6%
|
110.2%
|
San Francisco,
CA
|
$3,540
|
62.4%
|
73.1%
|
109.3%
|
160.8%
|
Detroit,
MI
|
$1,305
|
36.8%
|
34.8%
|
63.3%
|
64.4%
|
Riverside,
CA
|
$1,990
|
50.4%
|
71.8%
|
88.3%
|
98.3%
|
Phoenix,
AZ
|
$1,520
|
34.1%
|
43.2%
|
54.8%
|
71.9%
|
Seattle,
WA
|
$2,255
|
46.6%
|
53.4%
|
68.1%
|
95.2%
|
Minneapolis-St Paul,
MN
|
$1,705
|
43.0%
|
51.0%
|
66.3%
|
77.5%
|
San Diego,
CA
|
$2,740
|
58.6%
|
81.9%
|
91.5%
|
129.7%
|
St. Louis,
MO
|
$1,210
|
37.9%
|
39.3%
|
56.0%
|
59.7%
|
Tampa, FL
|
$1,490
|
39.8%
|
52.9%
|
63.2%
|
77.0%
|
Baltimore,
MD
|
$1,750
|
46.3%
|
49.7%
|
72.6%
|
89.4%
|
Denver, CO
|
$2,125
|
50.0%
|
60.6%
|
75.0%
|
89.4%
|
Pittsburgh,
PA
|
$1,110
|
28.6%
|
34.2%
|
49.1%
|
56.4%
|
Portland,
OR
|
$1,945
|
50.7%
|
60.9%
|
76.4%
|
92.1%
|
Charlotte,
NC
|
$1,405
|
38.5%
|
43.1%
|
61.6%
|
69.4%
|
Sacramento,
CA
|
$2,005
|
47.0%
|
75.9%
|
68.5%
|
99.0%
|
San Antonio,
TX
|
$1,390
|
37.4%
|
43.9%
|
68.8%
|
75.2%
|
Orlando,
FL
|
$1,550
|
42.0%
|
53.4%
|
67.0%
|
88.0%
|
Cincinnati,
OH
|
$1,245
|
32.2%
|
35.4%
|
56.8%
|
56.6%
|
Cleveland,
OH
|
$1,215
|
33.6%
|
36.1%
|
64.6%
|
65.2%
|
Kansas City,
MO
|
$1,260
|
35.5%
|
35.8%
|
57.1%
|
57.2%
|
Las Vegas,
NV
|
$1,445
|
38.2%
|
44.1%
|
52.9%
|
67.3%
|
Columbus,
OH
|
$1,465
|
38.8%
|
46.2%
|
66.0%
|
72.4%
|
Indianapolis,
IN
|
$1,245
|
34.2%
|
37.1%
|
55.8%
|
60.6%
|
San Jose,
CA
|
$3,725
|
52.9%
|
70.5%
|
110.7%
|
157.5%
|
Austin, TX
|
$1,760
|
48.7%
|
50.0%
|
77.9%
|
80.0%
|
Virginia Beach,
VA
|
$1,490
|
50.2%
|
45.7%
|
60.1%
|
68.9%
|
Nashville,
TN
|
$1,515
|
42.6%
|
49.2%
|
62.3%
|
68.8%
|
Providence,
RI
|
$1,790
|
46.0%
|
53.5%
|
67.1%
|
81.3%
|
Milwaukee,
WI
|
$1,390
|
45.8%
|
39.5%
|
66.5%
|
65.8%
|
Jacksonville,
FL
|
$1,410
|
44.2%
|
45.8%
|
60.3%
|
72.8%
|
Memphis,
TN
|
$1,050
|
39.2%
|
34.1%
|
64.5%
|
59.6%
|
Oklahoma City,
OK
|
$1,125
|
37.0%
|
36.5%
|
57.9%
|
60.6%
|
Louisville-Jefferson
County, KY
|
$1,145
|
33.8%
|
37.2%
|
54.1%
|
52.0%
|
Hartford,
CT
|
$1,670
|
38.0%
|
45.2%
|
77.2%
|
73.1%
|
Richmond,
VA
|
$1,465
|
40.5%
|
45.0%
|
59.1%
|
75.6%
|
New Orleans,
LA
|
$1,455
|
41.2%
|
42.9%
|
71.2%
|
79.5%
|
Buffalo,
NY
|
$1,300
|
40.7%
|
37.9%
|
56.1%
|
62.1%
|
Raleigh,
NC
|
$1,490
|
40.2%
|
45.1%
|
70.3%
|
78.5%
|
Birmingham,
AL
|
$1,060
|
29.9%
|
31.7%
|
52.4%
|
52.3%
|
Salt Lake City,
UT
|
$1,635
|
48.0%
|
53.1%
|
65.5%
|
74.3%
|
HotPads
HotPads is an efficient rental search platform
for urban areas across the United
States, with features designed for competitive markets such
as map-based search, real-time notifications and detailed
information on landlords and property managers that help renters
spend less time searching and more time feeling excited about their
next home.
Launched in 2005, HotPads is based in San Francisco and is owned and operated by
Zillow Group, Inc. (NASDAQ:Z and ZG).
HotPads is a registered trademark of Zillow, Inc.
i HotPads analyzed its rent data and income data from
the U.S. Census Bureau's American Community Survey to calculate the
rent burden – the share of a renter's income spent on housing – for
renters with and without a four-year college degree. Data are
available for early and mid-career renters and for more than 170
majors where data are collected by the ACS and made available by
the University of Minnesota,
IPUMS-USA. For more information,
email press@hotpads.com.
ii Data from Experian, Q3 2018.
https://www.experian.com/blogs/ask-experian/state-of-student-loan-debt/
iii https://www.federalreserve.gov/publications/2018-economic-well-being-of-us-households-in-2017-student-loans.htm
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SOURCE HotPads