In 2025, rental affordability in many U.S. metropolitan areas has reached extreme levels with some cities demanding incomes that stretch far beyond what many households can realistically manage. According to the Pedir Ayudas article, several Californian cities now require incomes over $100,000 per year just to keep rent and utilities within a traditional “30% of income” guideline.
In this post, we’ll dive deeper into the data, the underlying causes, the consequences for renters, and what policymakers and individuals can do about it.
What the Data Shows
Highlighted Figures
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In the case of Santa Cruz, California, the “Fair Market Rent (FMR)” for a two-bedroom apartment is reported at $2,580/month. To keep rent under 30% of income, a household would need to earn about $8,599/month or $103,184/year.
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That figure is about 59% above the national average monthly rent of $1,637 (for the comparable unit) at the time of the article.
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For a city like New York, New York, the FMR for a two-bedroom is given as $2,394/month and the corresponding required annual income is about $95,749.
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The article also notes that in California, the housing wage (hourly wage needed to afford a modest two-bedroom) is about $49.61/hour, implying that at the state minimum wage of $16.50/hour you’d need to clock about 98 hours/week to make it work.
Key Takeaway
What these numbers reveal is that in high-cost markets, the “normal” benchmarks for housing affordability (like spending 30% or less of income on housing) are under tremendous pressure. For many renters, staying within that benchmark is no longer realistic unless they have a relatively high income or multiple earners in the household.
Why Are Rents So High?
Several intertwined factors explain the steep rental costs in these markets:
1. Supply constraints
In places like Santa Cruz, San Jose and San Francisco, geographic limitations (coastlines, hills, protected land), stringent zoning rules, delayed permitting, and other regulatory burdens reduce how many housing units can be built. For example, a recent report cited by Fox Business states that California’s housing market is “hindered by overlapping layers of regulation” with large effects on cost.
2. Strong demand
These cities tend to be employment hubs (especially tech in Silicon Valley, the Bay Area, etc.), which drives high demand for rental housing. Many people are drawn to job opportunities, amenities and urban lifestyle, pushing up rental prices.
3. Cost escalation
Construction costs, land acquisition, regulatory compliance, and other overheads rise over time all of which tend to be passed on to renters. High demand + constrained supply = upward pressure.
The Pedir Ayudas article emphasizes that “the lack of supply, combined with increasing regulations and a shortage of affordable housing, creates an unsustainable situation” in these markets.
4. Market dynamics and affordability benchmarks
The conventional affordability benchmark rent payments at or below ~30% of income becomes harder to maintain when median incomes don’t keep pace with rent growth. The mismatch between income growth and housing cost growth is a root issue.
Cities in Focus: The Highest Cost Markets
Let’s look at some of the standout markets mentioned in the article and what makes them exceptional.
Santa Cruz, California
A coastal city with proximity to Silicon Valley and the Bay Area, Santa Cruz is described in the article as “the most inaccessible rental market in the United States.” With the FMR for a two-bedroom at $2,580/month and the required annual income over $100 k, many local workers simply cannot afford typical rental units without stretching.
Beyond the numbers, the city’s lifestyle appeal (beachfront, climate, recreation) adds to the desirability which helps drive prices up further.
San Jose & San Francisco (and similar California markets)
These cities (and others like Salinas and Santa Barbara) are flagged as similarly expensive. San Jose and San Francisco are major tech and innovation centers, drawing high-wage jobs but also huge numbers of workers and renters. The combination of high incomes and high rents pushes average costs above what many local service workers or non-tech workers can handle.
New York, New York
While the article highlights that New York’s rents (for a two-bedroom) reach $2,394/month (with required income around $95,749/yr) under the 30% rule, it also serves as a benchmark of how even the most iconic rental markets are under strain.
Additionally, New York’s housing shortage and regulatory environment further exacerbate rental cost pressures.
The Consequences for Renters & Communities
When renting becomes extremely expensive, there are a wide range of downstream effects both for individuals and for the broader urban fabric.
Increased cost burden & financial stress
Many renters end up spending far more than 30% of their income on housing, leaving less for other essentials like food, transportation, health care and savings. The article hints that in some cases individuals end up sharing apartments simply because solo accommodation is unaffordable.
Sharing, crowding, or relocating
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Sharing living space (with roommates, family, or friends) becomes more common as a coping strategy.
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Others may move further afield (to suburbs or exurbs) where rent is lower trading commuting time and convenience for lower cost. The article mentions “many people are choosing to leave their tiny apartments in the city center and move to the outskirts or even rural areas to improve their lifestyle.”
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In high-cost markets, service workers, young professionals, and families may struggle to find housing near their jobs leading to long commutes, traffic congestion, and lifestyle compromises.
Impact on workforce & local economy
If essential workers (teachers, hospital staff, public service workers) cannot afford to live near where they work, cities may face staffing issues or increased turnover. High housing costs can thus hamper the ability of a city to attract or retain needed labor in all sectors.
Exacerbation of inequality
Housing cost burdens tend to hit lower and moderate income households hardest. In markets where typical rents skyrocket, the gap between high-income earners (who can afford it) and others widens. This can lead to segregation by income, displacement of long-time residents, and erosion of community diversity.
What Can Be Done?
Addressing extreme rental cost burdens requires action at multiple levels policy, planning, and household strategy.
Policy & planning levers
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Increase housing supply, especially affordable and mid-market units: Cities need to enable more housing streamline permitting, reduce regulatory delays, allow higher-density development, adapt zoning to support multi-family housing.
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Incentivize affordable housing development: Use tax credits, inclusionary zoning, subsidies to promote units that are within reach of moderate incomes.
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Protect renters: Rent stabilization, stronger tenant protections, better enforcement to prevent displacement.
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Improve infrastructure & transit: Enabling living farther from city centers (with good transit access) can help spread demand and relieve pressure in the most expensive zones.
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Monitor & manage land-use regulations: As one comment in the Fox Business article suggested, regulatory burdens in places like California significantly inflate costs.
What renters (and prospective renters) can do
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Budget with realism: Recognize how much income you’ll need to stay within a comfortable housing cost ratio. If required income is much higher than yours, you may need to adjust expectations.
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Consider location trade-offs: Living slightly further out, or in less expensive neighboring areas, may allow you to spend less on rent while maintaining access to your job or amenities.
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Explore shared housing or alternative arrangements: If solo renting is unaffordable, look at roommate situations, co-living arrangements, or smaller units.
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Be proactive: In tight rental markets, being ready (credit check, references, timely applications) helps.
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Think long-term: Ask whether the rent you’re paying today is sustainable in the next 1-3 years. Are there expected increases? What’s your income trajectory?
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Know your rights: Understand the local tenant laws, rent increase limits, and what kind of supports may exist.
Final Thoughts
The rental landscape in 2025 is signaling that for many cities especially high-demand metro areas the cost of renting is no longer just “high” but increasingly out of reach for a large segment of potential renters. The data from Pedir Ayudas strongly underscores this: requiring incomes over $100,000 just to stay within the 30% benchmark of rental affordability is no small feat.
For cities, this is more than a housing issue it’s an economic, social and planning challenge. For individuals, it means that living in a “dream” city may come with a hidden cost: a disproportionate share of your income going to housing.
If you’re considering renting in one of these high-cost markets (or perhaps relocating from one), the key message is: know the numbers, know your budget, and know your alternatives.
Source: “San Francisco and San Jose top the list of cities with the most expensive rents in the US in 2025, exceeding $3,300 per month—more than the national average” – Pedir Ayudas Pedirayudas