Zillow Group Inc.

09/30/2021 | Press release | Archived content

To Afford Rent, Teachers and Nurses Are Living in Smaller, Older Homes

To Afford Rent, Teachers and Nurses Are Living in Smaller, Older Homes

Manageable rent burdens mask affordability challenges for many workers who can afford only a small pool of available rentals

- Rent burdens for many workers in fully in-person jobs, including teachers and nurses, have remained largely unchanged over the past five years, even as rent prices have grown significantly.

- However, only a small share of rental homes in many large markets are priced low enough to allow teachers and nurses to keep rent burdens where they are now.

- On average, these rental homes are smaller and older than typical rentals in each market. Older homes may increase the likelihood of living in unhealthy or unsafe conditions.

Sep 30, 2021

SEATTLE, Sept. 30, 2021/PRNewswire/ -- The Great Reshuffling has the potential to improve housing affordability for millions of Americans able to work remotely from a less expensive market. But for occupations that require in-person work - teachers and nurses, for example - affordability is becoming more of a challenge as rent growth sets new records. Many renters in those in-person jobs are battling for a small slice of the rental market comprising smaller, older homes, a new Zillow® analysis shows.

The analysis highlights the impact that more than a decade of underbuilding has had on renters as well as the need for communities to make it easier to build homes. New construction in the U.S. has fallen behind by millions of homes since the Great Recession, helping fuel record home value growth and increasing pressure on the rental market.

"Many renters have been able to keep costs low even as prices have grown over the past several years, but merely affording rent does not mean they are thriving," said Zillow economic data analyst Nicole Bachaud. "A deeper look shows a big slice of the market is out of reach for workers looking to maintain a comfortable rent burden. That often means renting an older home with less space but a smaller price tag, or doubling up with roommates or a partner."

While rent burdens - the share of income spent on rent - can appear low, especially when compared with recent growth in rent prices, renters often live with roommates or a partner, or target less desirable homes to keep housing costs manageable. The typical teacher spends about 22% of their income on rent, well below the widely accepted 30% rule for housing affordability. That's up only slightly from roughly 20% of income spent on rent five years ago, despite rent prices growing almost 24% over that period. To keep their rent costs this low, only a fraction of the rental market is available to teachers.

In Boston, for example, teachers on average only spend about 18.5% of their income on rent, down from about 20% in August 2016. But to do so, they must choose from only 6% of rentals in Bostonthat are priced low enough. Those homes are almost 300 square feet smaller and 33 years older than the typical Bostonrental. While age does not always tell the whole story when it comes to quality, living in an older home increases the likelihood of living in unhealthy or unsafe conditions.

Even in Tampa, where teachers spend almost 28% of their income on rent, just under the 30% affordability threshold and much higher than the 17.2% they spent five years ago, teachers are limited in their rental options. Only 2.2% of the Tamparental market is available for teachers who don't want to exceed that share of income spent on rent each month.

One way for communities to ease price pressures on renters is to make it easier to create new inventory, including relaxing zoning restrictions. Basic supply and demand is the primary driver of growing housing costs, so increasing the supply of affordable housing types can help meet demand. Zillow research has shown that even modest densification could exceed what is likely needed to meaningfully slow housing price growth over the long term.

"Boosting supply is the clearest path to improving affordability," Bachaud said. "Allowing for even small amounts of new density could have a big impact on prices."

Nurses face similar hurdles in finding an affordable rental. While nurses who rent live affordably in all large metros according to the 30% rule, they are renting homes at least 100 square feet smaller than the typical rental in each market. In San Diego, where nurses spend about 24.5% of their income on rent, only 8% of rentals are affordable at that rent burden.

Portland, Ore.is the most equitable rental market for nurses, with nearly two-thirds (63.4%) of the market available for nurses who spend 17.3% or less of their income on rent. The median rental available at that rent burden is 111 square feet smaller than the typical Portlandrental, the second-smallest difference of any large market; affordable rentals for nurses in Washington, D.C., are 108 square feet smaller than a typical rental.

Metro Area

Typical Rent Price in the Metro

Median Rent Paid

Median Rent Burden

Share of Rental Market Available at Current Rent Burden

Median Rent Paid

Median Rent Burden

Share of Rental Market Available at Current Rent Burden

New York, NY

$2,693

$936

18.5%

7.8%

$1,036

15.8%

5.2%

Los Angeles-Long Beach-Anaheim, CA

$2,630

$933

22.8%

8.2%

$1,374

20.3%

12.6%

Chicago, IL

$1,721

$675

19.0%

15.8%

$747

16.4%

19.3%

Dallas-Fort Worth, TX

$1,684

$807

18.0%

13.2%

$1,118

17.6%

23.9%

Philadelphia, PA

$1,705

$809

18.3%

7.3%

$1,358

21.0%

13.0%

Houston, TX

$1,519

$895

19.4%

29.5%

$912

15.9%

31.3%

Washington, DC

$2,125

$895

17.8%

18.3%

$924

16.2%

26.3%

Miami-Fort Lauderdale, FL

$2,343

$841

23.8%

3.8%

$909

21.7%

2.6%

Atlanta, GA

$1,827

$719

18.2%

0.9%

$1,056

22.2%

3.0%

Boston, MA

$2,532

$901

18.5%

6.3%

$895

14.2%

2.7%

San Francisco, CA

$3,092

$1,068

20.9%

13.3%

$1,686

17.0%

19.5%

Detroit, MI

$1,397

N/A

N/A

N/A

$649

14.4%

24.3%

Riverside, CA

$2,393

$927

27.1%

3.4%

$1,133

19.1%

8.1%

Phoenix, AZ

$1,806

$587

17.8%

2.8%

$910

13.4%

6.8%

Seattle, WA

$2,194

$971

21.7%

12.2%

$1,187

20.7%

25.4%

Minneapolis-St. Paul, MN

$1,590

$827

20.6%

28.6%

$899

19.3%

44.0%

San Diego, CA

$2,649

$1,224

24.5%

13.2%

$1,494

20.8%

8.4%

St. Louis, MO

$1,191

$541

12.0%

12.8%

$734

12.8%

38.5%

Tampa, FL

$1,876

$917

28.0%

2.2%

$1,025

19.5%

8.7%

Baltimore, MD

$1,775

$658

15.3%

13.5%

$934

19.4%

22.2%

Denver, CO

$1,903

$820

22.2%

32.6%

$1,152

26.9%

50.7%

Pittsburgh, PA

$1,218

$662

19.4%

17.7%

$987

18.5%

20.6%

Portland, OR

$1,773

N/A

N/A

N/A

$1,107

17.3%

63.4%

Charlotte, NC

$1,662

$590

16.0%

3.1%

$778

17.2%

6.5%

Sacramento, CA

$2,152

$768

21.3%

#N/A

$1,193

13.2%

17.4%

San Antonio, TX

$1,374

$791

15.8%

30.4%

$1,010

17.2%

40.0%

Orlando, FL

$1,798

$1,349

38.1%

6.1%

$838

18.2%

9.3%

Cincinnati, OH

$1,356

$571

14.2%

13.1%

$656

17.3%

14.7%

Cleveland, OH

$1,261

$407

9.6%

15.3%

$706

12.8%

11.6%

Kansas City, MO

$1,262

$597

13.9%

23.9%

$806

19.7%

45.4%

Las Vegas, NV

$1,718

$699

16.7%

4.4%

$981

19.6%

8.5%

Columbus, OH

$1,359

$736

16.8%

9.5%

$758

13.5%

14.9%

Indianapolis, IN

$1,391

$970

25.1%

19.4%

$634

13.8%

26.7%

San Jose, CA

$3,126

$1,175

20.1%

37.4%

$1,999

24.0%

53.4%

Austin, TX

$1,754

$744

20.9%

17.1%

$1,029

17.4%

25.7%

Virginia Beach, VA

$1,527

$588

16.6%

5.9%

$731

13.8%

5.1%

Nashville, TN

$1,768

$685

17.7%

6.6%

$792

19.3%

15.1%

Providence, RI

$1,785

$642

16.6%

5.3%

$1,088

23.6%

8.8%

Milwaukee, WI

$1,192

$431

12.6%

14.8%

$932

18.9%

14.9%

Jacksonville, FL

$1,629

$670

20.8%

10.3%

$874

17.0%

6.4%

Memphis, TN

$1,535

$764

19.8%

7.5%

N/A

N/A

N/A

Louisville-Jefferson County, KY

$1,145

N/A

N/A

N/A

$548

15.4%

8.2%

Hartford, CT

$1,604

$579

12.9%

3.3%

$982

25.2%

6.3%

Richmond, VA

$1,429

$1,094

26.6%

12.8%

$1,008

19.0%

31.6%

New Orleans, LA

$1,319

$517

13.4%

4.6%

$1,092

15.6%

27.4%

Buffalo, NY

$1,190

$426

14.6%

N/A

N/A

N/A

N/A

Raleigh, NC

$1,647

$561

14.6%

2.2%

$816

20.9%

8.5%

Birmingham, AL

$1,305

$427

25.4%

6.1%

$527

16.8%

11.0%

Salt Lake City, UT

$1,584

$484

12.9%

1.7%

N/A

N/A

N/A

*Table ordered by market size

About Zillow Group
Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life's next chapter.

As the most-visited real estate website in the United States, Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and nearly seamless end-to-end service. Zillow Offers® buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Home Loans™, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase. Zillow recently launched Zillow Homes, Inc., a licensed brokerage entity, to streamline Zillow Offers transactions.

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SOURCE Zillow

For further information: Alex Lacter, Zillow, [email protected]