WASHINGTON — Washington, D.C. is the second-least affordable area for renters in the nation, according to a report released Wednesday morning.
Only Honolulu is less affordable than D.C., based on the percentage of wages people pay in rent.
RealtyTrac released its 2016 Rental Affordability Analysis and found that average rent the D.C. region requires more than 60 percent of average wages, much higher than the 37 percent national average. RealtyTrac used rental data from the U.S. Department of Housing and Urban Development and wage information from the Bureau of Labor Statistics to crunch the numbers.
It is more affordable to live in New York City and San Francisco than it is in D.C.
On average, rents are increasing 3.6 percent year-to-year, while wages are only increase 2.6 percent. This pace is requiring people to spend more and more of their income on housing.
While rents are on the rise, they aren’t increasing as fast as home prices, which are accelerating at 5 percent. Daren Blomquist, vice president of RealtyTrac, says that despite the rent increase, it isn’t necessarily cheaper for people to become homeowners.
“Rents are becoming less affordable because they’re outpacing wage growth, but if a renter wants to transition and become a homeowner, it’s a really tough transition because home prices are accelerating even faster than rents are,” Blomquist said.
In 58 percent of the counties analyzed, it was cheaper to buy a home than rent one. In those areas, Blomquist recommends residents make the transition quickly before the market gets more expensive.
“Buying is more affordable than renting still in most of the counties, but I think by this time next year, because home prices are rising even faster than rent, we could see that equation change,” said Blomquist.
This may especially be true in one of the five most affordable counties for renters, which include the Atlanta and Pittsburgh areas. Rent accounts for 25 percent or less of an average income in those areas.
“If you’re a renter in one of these counties where it’s more affordable to buy than to rent, you may want to seriously consider, in 2016, buying a home before those home prices get even less affordable than they are now,” Blomquist said.
For more information, check out the full report on RealtyTrac’s website.