According to new research released by the mortgage and real estate agency Redfin, Houston was the second most affordable city in the US for rent affordability last year.
Redfin discovered that rental rates in the United States had dropped to their lowest points in three years after comparing the median rent prices of U.S. metro areas for the final three months of 2024 with the projected median household incomes in the same areas for 2024.
Redfin estimates that the average American renter must make about $63,680 annually to afford a standard apartment, which is 6.4% less than in August 2022 and 0.4% less than last year. In particular, Houston was ranked as the second most cheap city for renters, with the average Houston apartment costing $49,560.
Austin was classified as the most cheap metro area for renters, even though it had a higher income requirement of $55,760. “That’s because the rankings were defined by comparing a city’s median rent price to its estimated median renter income, rather than just ranking cities by which has the lowest overall rent,” explained Chen Zhao, head of economic research at Redfin.
“What we do is we take the median rent that we observe for a metro area,” Zhao explained. “Then we calculate the median income that you would need in order to pay that rent and maintain a ratio where you only spend a third of your income on rent.”
The percentage difference between the anticipated median renter income and the income needed to rent is then used to rank the cities. For instance, Redfin estimates that the median renter income in Houston in 2024 was $58,287. This means that the median income of Houston renters was 17.61% higher than what was needed to pay the median monthly rent.
Conversely, Austin renters’ income exceeded the median rent in their city by 25.14%. With an estimated median renters’ income that was 10.30% higher than the minimum, Dallas came in third on the list.
According to Zhao, the post-COVID surge in multi-family unit development is the primary cause of the decline in rental prices.
“Since the pandemic, there was a kind of big building boom when builders saw that there was so much demand for multifamily housing,” she explained. “Rents were going up 20% year over year in 2020 and 2021, but it takes a long time to complete these multifamily units, so what we see right now is that there are still 700,000 units across the country that are [currently] under construction.”
Regarding Houston’s reasonably priced real estate, Zhao stated that zoning regulations, which are frequently a deterrent to building elsewhere, are less stringent in places like Texas, particularly in Houston, which has no zoning laws.
“Zoning is the 500-pound gorilla when it comes to the regulatory burden for constructing homes,” she stated. “That’s really the difference between these regions compared to a place like New York or any place in the northeast.”
The three most costly cities to rent in were in different states, but the three most cheap places for renters were in Texas. Redfin ranked Providence, Rhode Island, as the most costly, with typical renters’ incomes 41.25% below the minimum level.
Miami had a negative income difference of 39.78%, making it the second most costly city according to Redfin’s criteria. New York had a negative income difference of 36.39%, making it the third most costly state.
Zhao claimed that current loan rates and other circumstances have made homeowners less fortunate, even though rental prices have decreased nationally.
Two factors separate the rental market from the for-sale market: first, mortgage rates [were] the second shoe to drop for the housing market, and second, I believe there has been more multifamily construction than single-family construction, she added. The third is that you also have to worry about carrying costs related to homeownership, such as property taxes and homeowners insurance, when it comes to the for-sale housing market.
