How Much Do Workforce Households Spend on Rent in the Top US Metros?
Small apartment properties play a crucial role in maintaining affordable rental options for the workforce segment across US metros.
Small Apartment Properties Provide Affordable Workforce Option
Housing affordability is a hot-button issue in many of the nation’s largest metro areas. While the cost burden is disproportionately skewed toward lower-income households, it is increasingly affecting those in the workforce segment.
As shown below, across all US metros in 2016, households earning up to 60 percent of the area median income (AMI) spent as much as a 63% share of their income on housing costs for renting single-family units, and around 57% in multifamily properties1.
In comparison, the housing cost burden on the workforce segment households (60%-120% AMI) stood at 30% in single-family rentals and large apartment properties, while declining to 26% in small apartment properties.
Smaller Metros Fare Relatively Better
A closer look at the rental affordability picture at the metro-level lends support to the recent attention on the largest cities in California and Florida, while also showing that smaller US metros fare better compared to the national average.
As shown below, the six least affordable large US metros (Top 20 by size) for small apartment property workforce renters were all located in these states, including Miami, Riverside-San Bernardino, Orlando, Los Angeles, San Diego and Tampa.
Half of all the Top 20 US metros fared worse than the national average, with New York, the largest US metro, coming in seventh in the least affordable ranking.
While rental units in places like San Francisco and Seattle come with larger price tags, higher average income levels help offset this rental cost, as covered in previous blogs.
The affordability picture improves for the smaller US metros (Top 21-50 by size), as shown below, where only 8 of the 30 metros in this grouping fared worse than the national average in 2016.
As expected, workforce renters in large apartment properties spend a larger share of their income across both large and small metro areas.
The above findings further underscore the significant role played by small apartment properties in maintaining affordable market-rate housing options for the workforce demand segment.
1All data is sourced from the American Community Survey (ACS), unless otherwise stated. ACS statistics are sample-based estimates of the compositional profile of the total population in the given year of data collection and include a margin of error.