RealPage® Releases 2022 Apartment Affordability Report by Market

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Data from millions of apartment leases shows renters spend 23% of their income on rent

RICHARDSON, Texas, July 18, 2022–(BUSINESS WIRE)–RealPage, a leading global provider of software and data analytics for the real estate industry, today released its 2022 Apartment Affordability Report during its annual RealWorld conference in Las Vegas. The report shows market-rate apartment tenants signing leases so far in 2022 are spending just 23.2% of their income on rent, up slightly from pre-pandemic norms, but still well below the traditional affordability ceiling of 33%. The results come from a first-of-its-kind study based on millions of actual apartment leases.

Rents, like almost all expenses in today’s inflationary market, are rising at the fastest rate in over 40 years. This has emphasized affordability. But the RealPage study shows that renter household incomes almost (but not entirely) keep pace with rents.

“The study shows that the affordability of apartments at market price is not yet a major concern, and will not be so long as wages continue to rise,” said Jay Parsons, chief economist and head of industry principals for RealPage. “There has been massive, qualified demand for apartments even as rents have risen, and that is why vacancy remains low and rents high.”

Of course, renters have not been immune to inflation. Median household income for market rate apartment renters so far in 2022 hit a record high of $75,000, up 15.4% from 2020. Over the same period, rent median monthly new lease jumped 21.9% to $1,510, nationally. . This reversed an eight-year trend of declining rent-to-income ratios. The share of income spent on rent fell from 21.3% in 2019 to 23.2% in 2022, marking a return to the 2011 norm.

“Apartment renters are spending slightly more on rent than before the pandemic, but many could still be stretched as other expenses, especially food and gasoline, are growing at much faster rates,” said Carl Whitaker, director of research and analytics for RealPage. . “We are closely monitoring rent collection trends and, so far, market rate tenants continue to pay rent at normal levels.”

In addition to rent-to-income ratios, RealPage also measured rent collection rates to get a more complete picture of affordability. The percentage of billed rent collected has consistently averaged 95% to 96% since the pandemic hit in March 2020. Previously, collections tended to increase slightly from 96% to 97%. High recovery rates in the market-priced apartment sector are one of the reasons why late rent payments and evictions never increased as much as some feared.

The RealPage Market-Rate Apartment Affordability Report is unique because it reflects the first study to capture the incomes and rents of the same households at scale, with nearly 7 million individual leases included. Previous studies have mixed different sets of data on rents and wages. This creates a misleading view of affordability, in part because most publicly available rent data leans toward more expensive, professionally managed rentals, while publicly available income data covers a much larger population. wider.

The RealPage study was limited to tenants of professionally managed market rate apartments signing a new lease. The data is collected from RealPage software, where property managers record household income from lease applications as well as signed monthly rental rates. RealPage calculated the rent-to-income ratio for each lease, then took the median ratio.

“This is a groundbreaking study that sheds new light on the subject of rent affordability,” Parsons said. “Obviously affordability at market price is not the problem. The real problem is the severe shortage of real affordable housing for the millions of households who cannot afford to rent or buy. C “is a separate challenge that is too often confused with the affordability of existing housing. Renters at market rates. We need a lot more housing across the country, especially affordable housing.”

“Housing affordability is a hot topic in the United States,” said Rich Hughes, data science manager for RealPage. “This study, which leverages RealPage’s unique and extensive database of residential leases, reflects our deep commitment to providing facts to better inform rental housing providers and tenants, both of whom are our customers. “

Other key findings from the RealPage report:

  • High-income tenants bear the largest percentage increases in rent, while low-income tenants pay a greater share of their income for rent.

  • In the Class A luxury sector, the median rent-to-income ratio was 20.5%. This compares to 22.1% in the mid-rent Class B segment and 24.5% in the lowest priced Class C properties.

  • Rent-to-income ratios by metro area range from 18% in Pittsburgh to 26% in Riverside. The vast majority are in the 20-25% range.

  • The results show that, as expected, more expensive markets require much higher revenues. The median income of a market-priced apartment household was around $150,000 in San Jose, San Francisco and New York. Revenues also hit six figures in Los Angeles, Anaheim, Oakland and Boston.

  • Renter household incomes bottomed out at around $42,000 in Memphis, New Orleans and Greensboro.

  • Apartment renters are not (yet) more frequently sharing with roommates to share rising rental costs. Leases signed in 2022 have an average of 1.63 occupants, compared to 1.65 in 2020 and 2021.

  • The median age of apartment renters stood at 31.4, equal to the 2019 pre-pandemic norm. This suggests that older potential buyers are not supporting apartment demand and incomes tenants.

The report can be downloaded from www.realpage.com/analytics. Additionally, RealPage will livestream a discussion on affordability from its RealWorld conference in Las Vegas on Tuesday, July 19 at 4 p.m. EDT. Join the livestream here.

About RealPage

RealPage provides a technology platform that enables landlords and property managers to change the way people live and use rental space. Clients use the platform to gain transparency into asset performance, leverage data insights, and monetize space to create incremental returns. Founded in 1998 and headquartered in Richardson, Texas, RealPage currently serves more than 19 million units worldwide from offices in North America, Europe and Asia. For more information, visit https://www.RealPage.com.

See the source version on businesswire.com: https://www.businesswire.com/news/home/20220718005233/en/

contacts

Nathalie Dent
PR & Communication
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natalie.dent@realpage.com

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