If you’re moving to San Francisco, you’ll have to shell out a big chunk of your salary on housing. In the country’s most expensive rental market, to afford a two-bedroom apartment, you’ll need to earn at least $216,129 annually.
While rental rates have increased in recent years, wages haven’t kept up. The median household income in the city is only $78,378. San Francisco, of course, tops the list of how much income you’ll need to afford rent in the nation’s largest cities. But the Bay Area’s example of surging rents and stagnant incomes represents a common theme seen in the other cities.
The personal-finance site SmartAsset figured out just how much you need to earn to afford to rent on a two-bedroom apartment in the largest U.S. cities.
To calculate the gross income required, the site set the rent-to-income ratio at 28 percent. That percentage is based on the U.S. government’s standard, which establishes affordability by a household not having to spend more than 30 percent of income on housing-related expenses.
According to Harvard’s Joint Center for Housing Studies, just 54 percent of U.S. renters in 2014 had affordable housing, SmartAsset points out. “The rest used more than 30 percent of their salaries to pay for housing costs,” the site says. “That means that millions of Americans were paying too much for rent, leaving them with less money to spend on other essentials or to put toward investing.”
SmartAsset found that out of the 15 big cities that it analyzed, only three of them saw average rental rates fall between 2015 and 2016. Among the three with declining rents, none of their fair market rents dropped by more than half of a percentage.
In the past year, market rents have climbed at a faster rate in Los Angeles, Phoenix and Dallas than in the other major cities. See SmartAsset’s charts below.