Affordability Not a Major Concern for Residents in Market-Rate Apartments

Affordability for market-rate apartments is not a major concern for owners as income wage growth is moving along with rent increases, according to the 2022 Market-Rate Apartment Affordability Report issued by RealPage in July during its RealWorld “The Pursuit of Excellence” users conference in Las Vegas.  The report showed that market-rate residents nationwide are spending 23.2% of their income on rent, which is well below the oft-quoted 33% affordability ceiling. The 23.2% measure is only modestly higher than pre-pandemic norms.  According to RealPage’s chief economist and head of industry principals, Jay Parsons, “Affordability won’t be a concern so long as wages continue growing. There has been massive, well-qualified demand for apartments even as rents have increased, and that’s why vacancy remains low and rent collections high.”  The RealPage Market-Rate Apartment Affordability Report reflects the first study to capture incomes and rents for the same households on a large scale, with nearly 7 million individual leases included.   Past studies have mixed-matched different datasets on rents and wages. That creates a misleading view on affordability, in part because most publicly available rent data skews toward pricier, professionally managed rentals, while publicly available income data covers a much broader population.  Continued Inflation Would be Problematic  Rents, like nearly all expenses in today’s inflationary market, are growing at the fastest pace in more than 40 years, which has put a spotlight on affordability, Parsons said.  The median household income for market-rate apartment renters so far in 2022 soared to an all-time high of $75,000, up 15.4% since 2020.   Over the same timeframe, the median monthly rent on a new lease jumped 21.9% to $1,510, nationally.   “That reversed a pattern of eight straight years of rent-to-income ra...