The cost of renting in the U.S. has risen to historic highs, according to a study from Zillow. While renters spent around 24.4% of their monthly incomes for rent prior to the real estate boom and downturn, they can now expect to pay approximately 30.2% – the highest percentage ever. In this article, TIME highlights six cities where the average person spends even more than that – devoting nearly half of their paycheck to paying their rent. Los Angeles tops the list, with renters there spending 48.9% of their monthly income on housing. Other cities on the list: San Francisco, Miami/Fort Lauderdale, San Diego, San Jose and New York/Northern New Jersey.
In the second quarter of 2015, the average renter spent 30.2% of his or her monthly income on rent, while homeowners only spent 15.1% of their paychecks on mortgage payments, according to an analysis from Zillow of regional income data, rental data and the Freddie Mac Primary Mortgage Market Survey. A good rule of thumb is to put no more than 25% of your monthly income toward monthly rent, but depending on how much you make and where you live, that may be difficult to do.
Of course, plenty of people who give their landlords more than 25% of their paychecks could probably reduce that cost by downsizing, sacrificing certain amenities or trading an expensive location for a longer commute. But it may not be so easy to do, especially in places that are particularly expensive. That not only can make it a challenge to budget for day-to-day expenses, but it can also present a significant obstacle to people who want to eventually own a home and must save for a down payment to do so. The higher your down payment and the better your credit score, the more likely it is you’ll get a lower interest rate and ultimately a more affordable mortgage.
When talking about pricey places to live, two locations tend to come to mind: New York and California. If we were to list cities outside of those states (and with New York, it’s really the NYC metro area that’s so costly), the three most expensive places to rent would be Miami, Denver and Boston, where people spend an average of 45%, 35% and 34% of their income on rent, respectively. The average NYC metro area homeowner spends 25.6% of monthly income on a mortgage payment.
Buying a home in Miami is a much better deal than renting, as far as monthly payments are concerned, according to the Zillow analysis. Last quarter, homeowners spent about 20% of their monthly income on mortgage payments, as opposed to the nearly 45% of income renters threw at their living arrangements.
