Riverside, CA, Sees Biggest Move Toward Rent Affordability, Study Shows

Rents for homes in Riverside, Calif., made the greatest strides toward affordability, according to figures from the Realtor.com July Rental Report.

Renters in the Inland Empire city with a typical household income spent 33.9 percent of their monthly paycheck on the typical rental property in July 2023, the report showed. That number exceeds the prescribed 30 percent affordability threshold, but the July figures represent a decrease of 3.4 percentage points compared with July 2022.

The median rent for July in Riverside was $2,240 vs $1,980 (at the 30 percent affordability threshold), according to Realtor.com. The city was No. 6 on the list of least-affordable metro areas in the country compared with relative median income.

Rents in the western and southern states remain higher than in other areas of the United States, but many areas in those regions showed improved affordability, Realtor.com reported.

“Renters in many areas are now spending slightly less on rent relative to their overall income, giving their budgets a little more breathing room at a time of stubborn inflation and ongoing affordability concerns,” Danielle Hale, chief economist at Realtor.com, told DS News. “With our midyear forecast update noting a surge in multi-family construction and an uptick in vacancy rates, we anticipate this downward pressure on rent prices will continue, providing many renters with much-needed stability in their housing expenses. Given the current rental market momentum and seasonal trends, it will be very unlikely to see a new peak rent in 2023.”

In the wake of years of COVID relief, supply-chain disruption, housing construction delays, and ballooning inflation, rents have seen double-digit increases. Many Americans continue to grapple with the increased cost of living and overall housing affordability, but the latest figures showed a third consecutive month of rent declines compared with the same time last year.

Nationwide, rent prices for 0- to 2-bedroom properties were down 1 percent from July 2022, the study shows. Meanwhile, the median asking rent in the 50 metros increased $15 to $1,759 from June to July 2023, but that was down $18 from the peak 12 months ago.

“As renters determine their next move, whether it’s to stay put, save up to buy a home, or move and rent in a new location, the rental landscape is showing signs of improvement,” Jiayi Xu, Economist at Realtor.com, told DS News.

Affordability Highlights:

• Coastal markets provided lowest affordability. Eight of the top 50 metros had a rent proportion greater than 30 percent relative to their median household income. Not surprisingly, the least affordable rental market was Miami, FL, followed by coastal or Sun Belt metros such as San Diego, Los Angeles, New York, Boston, Riverside, Tampa, FL and Orlando, FL.
• In July 2023, nationwide rent was slightly more affordable than in the previous year. Renters earning the typical household income devoted 25.9% of their income to leasing a typical for-rent home (vs. 26.5% in July 2022).
• Most affordable: Oklahoma City is the most affordable rental market. The median rent for a typical 0- to 2-bedroom unit made up 61 percent of its estimated maximum affordable rent, while the proportion was 59 percent a year ago.
• The report showed that affordability eroded most in more affordable markets such as Milwaukee-Waukesha, WI, Birmingham, AL, and Indianapolis, which experienced faster rent growth.

Realtor.com pulled rental data as of July for studio, 1-bedroom, or 2-bedroom units advertised as for-rent in the top 50 largest metropolitan areas on the Realtor.com website. Rental units include apartments as well as private rentals (condos, townhomes, single-family homes). The report calculates affordable monthly rent by applying the 30 percent rule to the estimated 2023 monthly median household income nationwide ($6,793 across the 50 largest U.S. metros, on average) and in each metro. The monthly median household income is derived from the annual median household income data sourced from Claritas, according to the report.