Renters in Philly spend 43 percent of their annual income on rent, according to a new report.
“A city is rent-burdened, or not affordable, if people spend more than 50 percent of their monthly income on rent,” explained Nat Kunes, the report’s author and AppFolio’s vice president of product management. “Philly isn’t like New York, where they spend 58 percent of their income on rent, but it’s definitely leaning toward the high-end.”
AppFolio and Axiometrics recently dug into the current state of the U.S. rental market to see which of the 20 most popular U.S. cities were actually affordable. Axiometrics, an independent real estate analytics firm, provided the average monthly rent of 1-bedroom apartments and the average monthly household income. AppFolio then used this information to calculate each cities’ affordability percentage.
In Philly, they found that the average monthly cost to rent a 1-bedroom apartment in Philly is $1,504. The average monthly household income is $3,470.
Even though Philly’s 43 percent is on the high-end, Kune says there is a silver lining. The report also found that Philly’s effective rent growth is relatively stable at 0.5 percent. If Philly’s rent prices remain steady and the city’s lackluster job growth rate improves, “renting will eventually be more affordable for people in the area,” says Kune.
This is trend was also noticed in a separate analysis put out by rental website Adobo. Based on its own rental listings in Philly, Adobo found that from January to February, Philly experienced a 6.4 percent decrease in 1-bedroom rental prices—that’s the third biggest drop in the nation.
Kune’s report found that developers and property owners have already started to take heed of Philly’s slowing rent growth and job growth by increasing incentives for potential renters “as a way to sweeten the pot.” Specifically, 1.8 percent of all of the 3,229 available units on the market are currently offering some sort of concession, from one month’s free rent to discounted security deposits.
Says Kune, “The main takeaway is that affordability will get slightly better in some cities this year. Not dramatically, but slightly better.”