The New Normal: Do You Spend More Than 30% of Your Income on Rent?
Its advice you may have heard from your parents, a financial advisor, maybe a talking head on a personal finance TV show: Dont spend more than 30% of your income on housing.
Long considered to be a wise upper-spending limit for your rent or mortgage (plus associated bills like utilities and homeowners insurance), 30% is increasingly tough to stick to these days. In some U.S. metro areas, its a distant memory.
Im a Real Estate Agent: Buy Real Estate in These 5 Countries To Be Rich in 10 Years
See: What To Do If You Owe Back Taxes to the IRS
Moodys Analytics has been tracking rent-to-income ratio (RTI) for 25 years. In 2022, the share of income needed to rent an average-priced apartment in the U.S. topped 30% for the first time in the studys history.
That made the U.S., as a nation, rent-burdened in economic parlance, with RTI climbing as high as 30.8%. Despite some relief in recent months due to slowing rent growth and relative financial stability for many households, U.S. RTI stood at 30.2% at the end of the first half of 2023, Moodys reported.