Rent-to-Income Ratios Hit Record Highs as Renters Face Mounting Financial Strain

Renters in the U.S. are dedicating an unprecedented share of their incomes to housing, with the average renter now spending 44 percent of their income on rent — well above the recommended 30 percent — according to Experian’s 2024 annual rental market report. This marks a 19 percent increase in rent-to-income (RTI) ratios over the past two years.

This widening gap between income and rent is straining household budgets nationwide, with low- to middle-income renters hit the hardest. Representing 61 percent of the rental population, this group faces an average RTI of about 56 percent, highlighting increasing affordability challenges.

Regional variations and rent growth

The affordability crisis is particularly acute in states like California, Massachusetts and Florida, where renters spend 46 percent, 45 percent, and nearly 44 percent of their income on housing, respectively. Nationally, 43 out of 50 states now report median RTIs exceeding the 30 percent benchmark.

The pressure is compounded by stagnant income growth, with renters earning on average $52,600 annually, while lease obligations continue to rise. The median monthly rent has climbed to $1,713 nationwide, with 42 percent of renters paying $1,500 or more per month, according to recent Zillow data.

Changing renter behaviors

Rising costs are prompting renters to prioritize essentials over nonessential services, according to recent studies. This shift is evident in leasing patterns, with most renters opting to extend their leases rather than move. Two-thirds of renters signed 12-month leases, yet many are choosing to renew rather than relocate.

Renters are also managing their financial obligations differently. Negative payment reports, such as late or missed payments, dropped by 4 percent since December 2023, as renters seemingly prioritize rent payments over other debt and in turn putting pressure on credit quality, Experian’s data shows.

Limited housing options add pressure

Despite an increase in new apartment builds this year, affordability challenges persist as many newer dwellings are geared toward high-income buyers, leaving a gap in affordable housing options for renters. The inventory shortage, exacerbated by the “lost decade of home construction” after the 2008 financial crisis, remains a major hurdle.

High mortgage rates also discourage homeowners from selling, with 80 percent locked into rates at or below 5 percent. This reluctance to list homes limits the housing supply, in turn keeping more people in the rental market and intensifying competition.

Where to go from here?

Industry experts suggest several ways forward to support an ever-increasing renter pool.

Transparent screening processes: Renters should have access to their screening reports and the ability to submit them to multiple properties, ensuring a fairer and more efficient process.

Digital solutions: Online lease signing, rent payments, and maintenance request options are rising as demand for digital convenience as well as increased security grows.

Credit-building tools: Renters should be educated about leveraging on-time rent payments to improve credit scores, which can open pathways to homeownership or other financial goals.

Fraud prevention: Enhanced digital security measures can help protect renters and property managers.

Outlook for 2025

The rental market is likely to see some markets’ vacancy rates rise next year. Yet mounting financial strain and affordability challenges persist among the steadily rising number of renters in the U.S. 

The focus remains on adapting to the realities of a still heavily constrained market. As renters continue to deal with soaring rent-to-income ratios, the housing industry must address these challenges not just through increased supply of more affordable housing but also with innovative solutions that support accessibility and fairness.

Michael Lucarelli is the CEO and co-founder of RentSpree.