California Ranks Highest for Rental Income Thresholds

News Summary

California has been identified as the state with the highest rental income thresholds, requiring six-figure salaries for comfortable living in key metro areas. Data from Zillow shows significant rent burdens across the state, with increases varying by city. San Jose leads at $136,532 annually, while cities like San Francisco, San Diego, and Los Angeles also present high income thresholds. The rising costs reflect broader national issues related to housing affordability, with increasing demands on both residents and lawmakers to address the crisis.

California Ranks Highest for Rental Income Thresholds

California has emerged as the state with the highest income thresholds required for financially comfortable rental living, home to five of the eight U.S. metropolitan areas where renters need six-figure incomes. Data from Zillow reveals significant stress on household finances due to rising rent costs across the nation’s 50 largest metro areas.

In April, renters in the San Jose metro area required an annual income of $136,532, the highest figure in the country, to keep rent expenses within a manageable 30% of the median income. San Jose experienced a 13% increase in rent burden over the past five years, a comparatively low figure relative to other major urban areas. Despite high rental prices, the median monthly rent was $3,413, which accounted for around 25% of local incomes, ranking as the 18th largest share nationwide.

San Francisco stands closely behind, where the income threshold for renters was $124,267, the fourth highest in the country. In contrast to the increase seen in other cities, San Francisco’s rent burden rose by only 9%, the smallest increase among the top 50 metros. Rent in the city reached $3,107 monthly, which represented 28% of local incomes, placing it 13th nationwide.

San Diego County also ranks high on the list with an income threshold of $122,810, the fifth largest in the U.S. However, it has grappled with a striking 41% increase in rent burden over the past five years. The typical rent here stands at $3,070, making up about 33% of local incomes—the fifth highest proportion nationwide.

Meanwhile, Los Angeles and Orange counties require an income threshold of $118,958, ranking sixth nationally, with a 28% increase in rental burden over the past five years. Rent averages $2,974, equating to roughly 36% of local incomes, the third-largest share in the nation.

Inland Empire tenants must earn $102,722 to afford rental prices, positioning them eighth among the 50 metros, with an alarming 46% increase in rent burden over the past five years. Rental costs in Riverside and San Bernardino counties average $2,568, representing 33% of local incomes, placing it sixth highest nationally. Sacramento is the only Californian metro area where the income threshold falls below $100,000, at $94,002, ranking 10th in the nation. The average rent here is $2,350, which comprises 28% of local incomes and ranks 12th nationwide.

Nationally, the income threshold required for financially comfortable rental living stands at $80,949, a notable 35% increase over five years. Across the United States, typical rent has reached $2,024, accounting for approximately 30% of an average American household’s income.

The exorbitant costs of multifamily housing in California are attributed to multiple factors. Construction expenses are more than twice as high as those in Texas and 1.5 times higher than in Colorado. Regulatory measures within California can extend project timelines by over 22 months, thereby inflating costs compared to states like Texas. In addition, publicly subsidized affordable housing in California often costs more per square foot than luxury market-rate developments.

As of 2022, 53.8% of California’s renter households were classified as cost-burdened, with nearly 30% allocating more than half of their income to rent. This issue has broadened nationally, with nearly half (49%) of renters in the U.S. now facing rent burdens, an increase from 40% in 2020.

Overall, Hawaii holds the top position in the highest rates of cost-burdened residents, followed closely by California, where the median rent stands at $2,803. The ongoing housing crisis in California has repercussions that extend to neighboring states—most notably, Nevada, where rents soared by 34% from 2019 to 2023.

Disparities in rental affordability are exacerbated for minority households, as Black and Hispanic renters tend to experience higher rent burdens. Additionally, more than 90% of states have ceased historic levels of rental assistance that were implemented to address housing costs during the COVID-19 pandemic, further complicating the rental landscape.

Deeper Dive: News & Info About This Topic

• Fresno Bee: Local News on Housing Costs
• Wikipedia: Housing Burden
• OC Register: Housing Costs Impact on Renters
• Google Search: California housing costs
• Secret Los Angeles: Gen Z Rent Burden
• Encyclopedia Britannica: Rental Housing
• ABC7: Rent Burden in Los Angeles County
• Google News: CA Rent Bearing Study
• KTLA: How to Identify Cost-Burdened Renters