Cash-strapped Americans hoping the instability in the stock market might help bring down residential rents just got some bad news. Zillow's April 2025 Rental Market Report clearly shows that America's housing affordability crisis is worsening. According to the study, the number of cities where renters must earn $100,000 per year to afford the rent has doubled since 2020.
Don't Miss:
- Maker of the $60,000 foldable home has 3 factory buildings, 600+ houses built, and big plans to solve housing — you can become an investor for $0.80 per share today.
- Inspired by Uber and Airbnb – Deloitte's fastest-growing software company is transforming 7 billion smartphones into income-generating assets – with $1,000 you can invest at just $0.30/share!
If that weren't bad enough, the report also showed that average renters must earn $20,000 per year more than they did in 2020 to afford 2025 rents. In simple terms, this means the high rents causing people to move out of markets like New York and Los Angeles are spreading to other parts of the country. The cities where average rents are so high that affording them requires a six-figure income are:
- Boston
- New York City
- Miami
- San Francisco
- San Jose, California
- Los Angeles
- Riverside, California
- San Diego
Los Angeles, Riverside, San Diego, and Miami are the newest additions to the $100,000 list since 2020. The spiraling rents are common in both the single-family and multi-family real estate sectors. Zillow's report shows the average rent for a "typical U.S. apartment" has increased by 28.7% to $1,858 since 2020, while the rent for single-family homes has increased by 42.9% to $2,256 during the same period.
Trending: Invest Where It Hurts — And Help Millions Heal: Invest in Cytonics and help disrupt a $390B Big Pharma stronghold.
By contrast, Zillow's data also estimates America's median household income has grown to roughly $82,000 since 2020. That's a 22% increase, but it's still insufficient to keep pace with the rent hikes during the same period. Based on Zillow's figures, a family or renter making America's median income would have had to spend 29.2% of their monthly earnings to rent an apartment in April. That's up from 27.4% in 2020.
In either case, landlords prefer tenants with an income-to-rent ratio of 3:1 when processing rental applications. It's easy to look at that and assume that tenants spending an average of 29.2% of their income on rent isn't the end of the world. However, it's important to remember that many renters also struggle with other financial obligations, such as student loan debt, credit card debt, or both.
See Also: This Jeff Bezos-backed startup will allow you to become a landlord in just 10 minutes, with minimum investments as low as $100.
When you add those expenses to the rent, it becomes difficult for renters to put money aside to invest or purchase a home. That could potentially leave millions of Americans stuck in a vicious cycle where they become perpetual renters. Even Americans who earn the $100,000-plus annual income required to afford apartments in America's most expensive cities are hard pressed to afford homes there.
On the other hand, it's an ideal situation for many residential real estate investors or REIT shareholders. The existence of a permanent tenant base would allow them to lock in passive income streams for many years to come. However, they may not be able to bank on continued increases in their returns. Even if renters' inability to buy permanently locks them into renting, landlords can't raise rents in perpetuity if salaries aren't growing at a proportional rate.
Read Next:
- With Point, you can get up to $500,000 in cash from your property with no monthly payments and no income requirements — even if your credit isn't perfect.
- ‘Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. You can invest today for just $0.30/share with a $1000 minimum.
Image: Shutterstock
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
