A new report includes Grand Rapids on a list of metro areas with rent prices that are outpacing wage growth.
Self Financial recently published a report, “Cities Where Residents Have to Work the Most Hours to Pay Rent,” and Grand Rapids ranked No. 36 out of the 53 largest metropolitan statistical areas in the study and No. 144 out of all 349 metro areas analyzed.
The data showed individuals in Grand Rapids have to work 36.2 hours per week to afford rent for a one-bedroom apartment and 44.1 hours for a two bedroom with fair market rent for the former at $789 and the latter at $962 in 2020, a year-over-year rent price increase of 7%.
The median hourly wage in Grand Rapids was listed at $17.98, and the median annual wage was at $37,410.
This compares to U.S. Department of Housing and Urban Development data that shows fair market rents at the national level to be about $980 for a one bedroom and $1,200 for a two-bedroom rental in 2020. The most recent median hourly wage estimate from the U.S. Bureau of Labor Statistics is $19.14.
Self’s Jeff Smith wrote in the report that while the pandemic has exacerbated matters, “housing affordability has been a persistent issue in several parts of the country due to the rise in rental costs outpacing wage growth.”
Overall, coastal states still are the least affordable for renters, with individuals in Hawaii, California, New York and Massachusetts having to work 50-60 hours to afford a one-bedroom rental without being cost-burdened.
To find the metro areas where residents need to work the most hours to pay rent, Self analyzed rental price statistics from the U.S. Department of Housing and Urban Development and wage data from the U.S. Bureau of Labor Statistics.
Metros with at least 100,000 residents were included in the analysis and were grouped into cohorts based on population size: large metros (1 million residents or more), midsize metros (350,000-999,999 residents) and small metros (less than 350,000 residents).
To determine the number of weekly work hours needed to afford rent, Self assumed individuals would work 52 weeks per year and spend no more than 28% of gross income on rent — a common benchmark used for housing affordability.
Locations were ranked based on the number of weekly work hours needed to afford a one-bedroom rental. In the event of a tie, the number of weekly work hours needed to afford a two-bedroom rental was used.
Top 10 unaffordable large metros
- San Jose-Sunnyvale-Santa Clara, California
- San Francisco-Oakland-Hayward, California
- Los Angeles-Long Beach-Anaheim, California
- San Diego-Carlsbad, California
- Boston-Cambridge-Nashua, Massachusetts-New Hampshire
- Miami-Fort Lauderdale-West Palm Beach, Florida
- New York-Newark-Jersey City, New York-New Jersey-Pennsylvania
- Orlando-Kissimmee-Sanford, Florida
- Seattle-Tacoma-Bellevue, Washington
- Portland-Vancouver-Hillsboro, Oregon-Washington
The full report, showing a breakdown of rent prices and wages for each city, is at self.inc.