In many parts of the United States today, renting isn’t the affordable alternative it used to be. What used to be a flexible, budget-friendly option for millions of Americans has now turned into a financial challenge especially in the country’s hottest markets.
According to a new analysis by Investopedia, the number of U.S. rental markets where renters need to earn at least $100,000 to afford the average home has doubled since 2020. It’s a reality many households are feeling: wages simply haven’t kept up with runaway rent growth.
Rent Prices Are Climbing Faster Than Incomes
One of the biggest reasons renting has become so expensive is the widening gap between rent increases and income growth.
Here’s what the data reveals:
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Typical apartment rents have jumped 29% since 2020 now averaging around $1,858/month.
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Single-family rental homes are even pricier, up 43% to an average of $2,256/month.
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Meanwhile, median household income has only grown 22.5%, reaching about $82,000/year.
This mismatch puts substantial pressure on renters. The average household now spends 29.6% of its income on rent creeping closer to the widely accepted “cost burden” threshold of 30%.
In many markets, renters are far beyond that limit.
The Cities Where Renters Need Six-Figure Salaries
According to the report, eight major metropolitan areas now require renters to earn over $100,000 annually to comfortably afford an average rental home.
That’s twice as many markets as there were just five years ago.
These areas typically see:
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High demand from both locals and out-of-state transplants
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Limited rental supply
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Competitive housing markets that continue pushing prices upward
Even more challenging, some of these metros require renters to spend well over 30% of their income on housing unless they earn significantly more than the median.
Upfront Costs Are Adding Even More Pressure
It’s not just monthly rent that’s skyrocketing getting into a unit is becoming more expensive too.
Many renters face:
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Security deposits
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Broker fees (especially in cities like NYC and Boston)
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First and last month’s rent
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Application or administrative fees
In highly competitive markets, these costs can stack up to thousands of dollars upfront, creating a major barrier even for middle- and upper-middle-income households.
This is making the actual cost of renting higher than ever, especially for people trying to relocate or move into more stable housing.
What This Means for Renters and the Housing Market
The shift toward high-income renters has significant implications:
1. Renting is no longer the “cheaper option.”
In some cities, renting now requires income levels that were once associated with homeownership, not temporary or flexible living.
2. Middle-income families are getting squeezed out.
Renters earning average wages are finding it harder to compete especially in coastal or fast-growing metros.
3. More renters may consider leaving expensive cities.
As affordability worsens, people are looking toward:
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Smaller metro areas
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Suburbs
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Housing markets with better rent-to-income ratios
This could reshape migration trends and urban landscapes over the next decade.
4. The rental affordability crisis is becoming a long-term issue.
With little sign of rents dropping significantly nationwide, the strain on renters will continue unless wage growth catches up or more housing supply is built.
What Renters Can Do in Today’s Market
While the landscape is challenging, there are practical steps renters can take:
Track your rent-to-income ratio.
Aim to keep rent under 30% of your gross income. If it’s not possible in your current market, explore neighboring cities or alternative housing options.
Budget for upfront costs before moving.
Security deposits, admin fees, and first/last month’s rent can significantly increase the cost of relocating.
Expand your search area.
Sometimes moving just 10–20 minutes outside a high-cost zone can significantly reduce rent.
Monitor local rental trends.
Rental markets fluctuate. Staying informed helps you negotiate better or time your move strategically.
Consider long-term housing goals.
If rents continue soaring where you live, it might make financial sense to compare the long-term cost of renting vs. buying.
Final Thoughts
The rental market is undergoing a major shift one where six-figure incomes are increasingly becoming the starting point, not the ceiling, for comfortable living in top U.S. cities. As rent prices continue to outpace wages, renters face a tightening squeeze that shows no signs of easing soon.
Understanding these trends is the first step to navigating them. Whether you’re relocating, budgeting, or planning for the future, staying informed can help you make smarter housing decisions.
Source: https://www.investopedia.com/markets-where-renters-need-usd100-000-11733467