The Tech Hub Emerging as America’s Most Affordable Market for Renters

While aspiring homeowners are facing economic headwinds, rents are becoming increasingly affordable nationwide, with Western and Southern metros leading the way. However, one metro stands out from the rest.

In September, Austin, TX, the COVID-19 pandemic-era boomtown and technology hub, overtook Oklahoma City, OK, as the nation's most affordable rental market.

A family earning a typical household income looking to rent in Austin would spend just 16.5% of their monthly paycheck on housing, down 2.8 percentage points from a year ago, according to the September monthly rent report from Realtor.com®.

"Austin's rising housing affordability is primarily driven by declining rents," says Realtor.com economist Jiayi Xu. "The market has experienced the largest rent declines among major U.S. metros over the past several years."

In September, the typical asking rent in Austin came in at $1,411, down more than 7% from a year ago. 

Brad Pauly, an Austin broker and the owner of Pauly Presley Realty, says Austin's growing rental affordability comes as no surprise.

"Currently, it's about 30% less expensive to rent than purchase," he tells Realtor.com. "I think most first- time homebuyers are delaying their home purchases while they keep an eye on mortgage rates in the shopping portals."

So why are rents falling in Austin? Xu attributes the trend to a surge in multifamily housing construction in the West, which she says has expanded supply, put downward pressure on rental prices, and improved overall affordability.

Over the past decade, Austin has established itself as a globally recognized technology hub, with Tesla, Oracle, and Realtor.com relocating their headquarters to the Texas state capital—and drawing high-earning professionals to the area.

But the metro hasn’t been immune to the challenges affecting much of the country, including elevated mortgage rates, economic uncertainty, and an oversupply of homes for sale.

Lowest rent in the U.S.

Even after being surpassed by Austin as the nation’s most affordable rental market, Oklahoma City remains impressively budget-friendly. 

In September, the Sooner State's most populous city recorded a median asking rent of just $1,007, the lowest among the top 50 U.S. metros in absolute terms.

The typical household in Oklahoma City would have to set aside just 16.9% of its monthly income on rent, down 1 percentage point from a year ago. 

Xu confirms that Oklahoma City's rental affordability hinges on its low and stable prices.

"Over the past six years, the median asking rent in Oklahoma City has remained within a relatively narrow range of $900 to $1,055, making it one of the most accessible rental markets among major U.S. metros," adds the economist.

Three additional metros stood out as some of the most reasonably priced rental markets in the U.S. Raleigh, NC, notched the No. 3 spot, with rents there consuming 18% of the median monthly income. Columbus, OH, came in at No. 4, with tenants spending 18.1% of their income on rent, while Minneapolis rounded out the top five at 18.7%.

National rental trends

September marked the 26th consecutive month of annually declining rents, which trended down in all size categories, from studios to two-bedroom units.  

The median asking rent across the 50 largest metros clocked in at $1,703, down $10 from August and $36 from a year ago—but still $241 higher than in 2019.   

Nationally, tenants earning the typical household income would have to put 23.4% of their earnings toward rent, down from roughly 25% a year ago.  

The U.S. Department of Housing and Urban Development defines cost-burdened households as those paying more than 30% of gross income on housing, and severely cost-burdened households as those paying more than half of their paycheck to keep a roof over their heads.

Least affordable rental markets

Perhaps unsurprisingly, expensive, sought-after coastal metros earned the dubious distinction of being the least affordable rental markets in September, with Miami at the forefront.  

A household renting a median-priced apartment in the Magic City would have to spend about 37% of its monthly income on housing, nearly the same as in Los Angeles, the nation's second-least affordable market. 

New York City came in third, with rents in the Big Apple gobbling up 36.7% of a household's earnings. 

Boston and San Jose, CA, were not too far behind, with rents in those cities consuming more than 32% and more than 31% of a household’s income, respectively.

However, there is some good news for tenants in those high-priced areas. 

"Encouragingly, the rent-to-income ratio in all five of these metros has declined compared to the same time last year, signaling a modest improvement in affordability across these most cost-burdened markets," notes Xu.

In fact, despite being the nation's least affordable rental market, Miami was also one of the most improved metros compared to last year, trailing only San Diego and Jacksonville, FL.

"The primary driver behind this trend in both regions is the increase in new rental supply, which is helping to ease rent pressure and prices in these markets," explains Xu.