Buying a home is not in the cards for all, especially in markets where home values recovered, wages aren’t increasing and rents are rising. Some homeowners lost their properties during the Great Recession, forcing them into the rental market, but many others rent because they simply cannot afford to buy. Nationally, rents are currently rising faster than home values and cost renters about 30 percent of their income each month. With steep monthly bills, it’s challenging to save enough money to buy.
Regardless of the reason you’re renting, here are a handful of markets across the country where rents are still reasonably priced.
St. Louis renters pay just 24.4 percent of their monthly incomes on rent. That’s the lowest percentage of all 35 major metros studied by Zillow. Median monthly rent costs $893, up 4.6 percent in the last year. Additionally, local builders are keeping up with renter demand, ensuring new residents are able to find open units. The city permitted 1,036 new units for every 1,000 new residents between 2012 and 2013. Keeping rental inventory ahead of demand makes shopping for rentals less competitive than other markets.
Detroit locals pay 24.6 percent of their monthly income on rent – just slightly higher than St. Louis renters. Monthly rents cost a median price of $756, only 0.7 percent higher than last year. However, the local economy isn’t as strong as other communities that also boast lower than average rents.
Kansas City renters pay just less than a quarter of their monthly income on rent (24.9 percent). Median monthly rents cost $978, just 0.6 percent higher than this time last year. But, competition for quality rentals is much steeper in KC than St. Louis as the city only permitted 517 new units for every 1,000 newcomers between 2012 and 2013. In rental markets like KC, you’ll want to have a clean rental history, healthy credit score and prompt reaction to new listings to lease the unit you desire.
Pittsburgh residents pay 25.2 percent of their monthly incomes on rent and are in the best position for availability and stable rent prices. The median rent price in the city is $1,048 per month, up only 0.7 percent in the last year. Pittsburgh permitted about 8,000 new units for only 190 new arrivals in the same time period as above, creating widespread rental inventory. Sticking to the same ratio, that’s 42,258 new permits per every 1,000 new residents.
Atlanta renters pay only slightly more than Pittsburghers at 25.4 percent of their monthly income. Median rent costs $1,324 each month, due to a steep 10.2 percent hike in the last year. Like Kansas City, Atlanta renters face significant competition with only 301 new unit permits per 1,000 new arrivals between 2012 and 2013. Regardless of competition, rents remain low compared to other markets across the country.
Though 25 percent of your income may seem steep to pay toward rent, it’s less than the U.S. median of 30 percent and tremendously more affordable than markets like Los Angeles where renters pay 48.2 percent of their monthly income on rent.
If buying is not within reach, but saving on housing costs is, consider moving to one of these five locations. While renting at lower costs, put some cash away for your future down payment and work on improving your credit score for the best possible interest rates on your dream home.
Tali Wee is a Marketing Content Specialist at Zillow.com. She writes about personal finances, mortgages, and home improvements for the Zillow Blog and other Zillow partners.
Views expressed are the personal views of the author, and do not represent the views of the National Foundation for Credit Counseling, its employees, its members, or its clients.