Home prices in the United States have skyrocketed over the past year. Nationally, prices are up about 20% from 2021. In some cities, the figure is up 30% or more.
The increase in house prices was driven by several factors. The first is low mortgage rates, often below 3% for 30-year fixed mortgages, before the numbers soared recently. People could afford homes that would have been out of their reach most years in the past.
Another reason for rising house prices, at least in some parts of the country, is the new mobility of Americans brought about by the COVID-19 pandemic. The ability to work from home has allowed people to leave expensive big cities and move to more affordable cities.
As the demand for housing has increased, so have rents. People who cannot afford a home or who do not want to be tied down by a mortgage for several years have turned to the rental market. As is the case with houses, rents vary considerably from year to year.
To determine the city with the highest rent, 24/7 Wall St. looked at five-year estimates of median gross rent from the US Census Bureau’s 2020 American Community Survey (ACS). The median gross rent in the United States is $1,096, and in the cities we considered, which we define as having populations between 1,000 and 25,000, rents range from $2,467 to over 3,500 $.
Of the universe of the 50 cities we considered with the most expensive rent, California has by far the most, with 24, followed by Hawaii, with seven, and New York and New Jersey with six each. Included are some of the very affluent suburbs of major cities across the country such as Scarsdale, New York (one of many affluent New York suburbs in Westchester County) and Topanga, California (an affluent, artist-friendly community on the outskirts of Los Angeles).
In some of the cities with higher rents, a greater share of housing is occupied by tenants rather than owners. Nationally, 35.6% of dwellings are rental properties. In 12 of the cities we studied, this share is at least 60%. This is largely because these places have more expensive housing markets overall, which means residents are deprived of the opportunity to own a home and are forced to rent. Nationally, the median home value is $229,800. In all but four cities we looked at with available data, the typical home is worth more than double, and 18 cities on this list have median home values over $1 million.
While rents in these markets are much higher than the national figure, renting property is actually relatively affordable in many places, after taking into account the income of the typical resident.
The most expensive city to rent a house in is Topanga, California. Here are the details:
- Median monthly rental cost: $3,500+
- Share of income typically spent on rent: 36.3% (tied for 623rd out of 5,275 cities)
- Occupied rental housing: 25.1% (785th lowest out of 5,275 municipalities)
- Median home value: $1,124,200 (38th highest out of 5,198 cities)
Methodology: To determine the city with the highest rent, 24/7 Wall St. looked at five-year estimates of median gross rent from the ACS.
We used census “place” geographies, a category that includes incorporated legal entities and census-designated statistical entities. We defined cities according to population thresholds: having at least 1,000 inhabitants and less than 25,000 inhabitants.
Cities were excluded if the median gross rent was not available in ACS 2020, if there were fewer than 500 renter-occupied dwellings, or if the sampling error associated with a city’s data was considered too high.
Sampling error was defined as too high if the coefficient of variation (a statistical assessment of the reliability of an estimate) of a city’s median gross rent was greater than 15% and greater than two standard deviations at above the average coefficient of variation for all cities. median gross rents. We also excluded cities that had too high a sampling error for their population, using the same definition.
Cities were ranked by median gross rent. To break the links, we used median gross rent as a share of household income.
Additional information on median gross rent as a share of household income, share of renter-occupied households, and median house value are also five-year estimates from ACS 2020.
Click here to see all the cities with the most expensive rent.