Contractors are getting busy putting up more apartment buildings

Photo (c) Mariia Borovkova - Getty Images

It’s tough for renters now but there could soon be some relief

Housing economists predict renters could find some relief in the coming months because of an increase in multi-family construction. 

The U.S. Census Bureau this week reported a big spike in residential construction starts which include new apartment buildings. Construction starts on apartments increased in May by the largest margin since 1985.

It comes at a good time for renters, especially those in the most expensive markets. A ConsumerAffairs study published last month identified markets where renters are feeling the most pain, as well as cities where rents are most affordable.

Researchers found that North Dakota, South Dakota, and Iowa are the best states for renters while California, Massachusetts and Nevada are the worst.

Real estate site Real Estate Witch recently listed the seven most expensive cities in which to rent a home and the percentage the cost has risen over the last 12 years.

  1. San Jose (85%)

  2. Denver (82%)

  3. Seattle (81%)

  4. Portland, Ore. (72%)

  5. San Francisco (71%)

  6. Nashville (62%)

  7. Austin (60%)

Lots of good jobs

What these cities have in common is a fast-growing population and an abundance of high-paying jobs. San Jose and San Francisco are in the heart of Silicon Valley and have some of the most expensive homes in the nation. Nashville and Austin experienced growth spurts during the pandemic.

What puts additional pressure on renters is the fact that rent tends to go up on a regular basis and it also tends to increase faster than incomes. Personal finance advisers say renters should pay no more than 30% of their monthly income on rent, but in the most expensive cities that’s the exception, not the rule.

However, there are a handful of cities where the rent-to-income ratio is below 30%.

  1. Miami (28%)
  2. Los Angeles (25%)
  3. Orlando (25%)
  4. San Diego (25%)
  5. Riverside, Calif. (24%)
  6. Tampa (24%)
  7. Las Vegas (23%)
  8. New Orleans (22%)
  9. New York (21%)

Low-income renters are getting squeezed

But rents remain high just about everywhere. According to a recent Zillow study, the Housing Choice Voucher program, also known as Section 8, cannot keep up with demand from low-income families in most American cities.

“Renters across the country are struggling as costs have skyrocketed and vouchers have failed to keep up," said Orphe Divounguy, senior economist at Zillow. "Better calculating for voucher values and more funding are good short-term solutions, but building more homes is the long-term answer."

Zillow research found there was not a single large metro area with enough vouchers to meet demand. Across the country, there were nearly 10 times as many eligible voucher recipients as there were vouchers. In addition, there were nearly four times more severely cost-burdened households than voucher recipients.

Take a Home Warranty Quiz. Get matched with an Authorized Partner.