Affordable Rentals Vanish: Sub-$1K Apartments Now Just 7.5% of Market

An accelerating surge in apartment rents is tightening the squeeze on the most affordable segments of the U.S. rental market. According to a new report from Redfin, renters seeking apartments under $1,000 a month are increasingly struggling to relocate as rising costs force them to stay in place longer and the number of new listings continues to dwindle.

The analysis, which used data from the U.S. Census Bureau, found that the fraction of renters in this demographic declined from 50.4% in 2012 to 35.2% in 2022 and to 32.1% last year. Redfin attributed the decline in listings to a boom in asking rents after the pandemic, which led to rents stabilizing near their record highs soon after.

The firm highlighted that while the median asking rent for housing in the U.S. is $1,634 per month, this figure has changed very little from last year and is 20% higher than the median rent before the pandemic.

“Low-income workers, college students, immigrants, and people on the fringes of homelessness have had to come up with new ways to be resourceful, with some taking on multiple roommates and others receiving financial support from family or friends,” Redfin Senior Economist Sheharyar Bokhari said.

The fraction of apartments listed for less than $1,000 a month has dropped to 7.5% this year, according to data from Redfin and Rent.com. This decline has also led renters in this demographic to stay put for longer. Two out of every five renter households paying under $1,000 per month have been in their apartments for five years or more, representing a larger fraction of renters than those paying between $1,000 and $1,999 per month (26.1%) and those paying between $2,000 and $2,999 per month (17.2%).

Redfin highlighted the stark disparity in affordable housing across major U.S. metros. Oklahoma City, New Orleans, and Cleveland, for example, have more than 64% of renters paying under $1,000 a month. However, rising demand in these areas has driven median asking rents up, with Cleveland experiencing an 11.1% year-over-year increase.

Conversely, expensive markets like San Diego and San Jose have the lowest shares of renters below the $1,000 threshold, at just 7.1% and 7.8%, respectively. Baltimore is an outlier, where the share of renters paying under $1,000 has increased since before the pandemic, yet many other metros, including Birmingham and Phoenix, have seen significant declines.

While some metros show a glimmer of hope with increased availability at lower price points, the overall trajectory points to a tightening market. The coming decade could see the continued erosion of this segment of the market given the persistence of elevated inflation and the decline in new apartment construction.