The average American is now rent burdened, spending at least 30% of their median income on housing, according to a recent report by Moody’s Analytics.
The financial services company said it’s the first time the nation has reached that symbolic threshold in the more than 20 years it’s been tracking rental prices.
The U.S. Department of Housing and Urban Development defined “rent-burdened” as those households paying more than 30% of their income on housing, who “may have difficulty affording necessities such as food, clothing, transportation, and medical care.”
While rents have been trending upward for decades, the COVID pandemic exacerbated the issue.
During the first two years of the pandemic, migration to smaller cities and outer suburbs, particularly in the Southeast and Southwest, drove up prices in areas that have typically been more affordable.
In the D.C. area, people continue to move to outlying areas. While the average rent for a one-bedroom has increased 4% percent in D.C. in the past year, it’s jumped 49% percent in Ashburn, 31% percent in Waldorf and 12% percent in Gaithersburg, according to Rent.com.
The report by Moody’s Analytics also pointed to higher mortgage rates blocking many Americans from buying homes which has only increased the demand for rentals.
On a positive note, the rental market does show signs of cooling.
The Biden administration also recently rolled out a ‘renters bill of rights’ to expand protections for renters and promote rental affordability.