Out of the 25 largest U.S. rental markets, less than 19 percent of all listings are affordable for recent college graduates, with the most affordable places including St. Louis, Dallas, Houston, Atlanta and Phoenix, according to a new report from Trulia.
The least affordable are Portland, Oregon; Riverside-San Bernadino and Orange County, both in California; Miami; and San Diego.
Trulia measured “graduate affordability” by reviewing the share of rental homes on Trulia, as of May 7, 2015, that are within reach of an employed, college graduate between the ages of 22 and 25.
The standard for the report is based on whether the total monthly payment, including rental payment and insurance, is less than 31 percent of the metro area’s median income for recent grads.
For instance, in Atlanta, the median salary for a new grad is $25,571 per year. If you’re only making this much money, then you can only rent homes that cost less than $661 per month based on the 31 percent guideline.
“Sadly, this means just 8.7 percent of the homes for rent in Atlanta (those listed for less than $661) are within reach,” writes Ralph McLaughlin, housing economist at Trulia.
St. Louis was named the most affordable, with 18.6 percent of rental units being affordable to new grads. The Gateway to the West has the lowest median rent in the country, at $868, and new grads in the city have a median income of $25,778, according to the report.
‘Generally, the Picture isn’t Pretty’
Portland, Ore., ranked as the least affordable. Median income for new grads in Portland was the second lowest on the list at $18,560, and the median rent was $1,215.
Renting tends to be the most expensive in areas that have the highest salaries. For example, graduates in San Francisco have the highest median income of $41,244, but the median rent is also highest at $3,500, according to Trulia.
Writes McLaughlin: “Generally, the picture isn’t pretty for recent grads who want to find an affordable place on their own. Those who head to the Midwest and Southern states can save the most on rent. But even in St. Louis, which tops the list of most affordable metros for new grads, just 18.6% of rental units are affordable. And it’s all downhill from there: with the next most affordable areas having less than 15% of affordable rental units.”
Here’s how the top 25 rental markets ranked in affordability for recent graduates, according to Trulia:
1. St. Louis 18.62%
2. Dallas 14.87%
3. Houston 10.36%
4. Atlanta, 8.71%
5. Phoenix, 8.05%
6. Philadelphia, 5.07%
7. Baltimore, 4.82%
8. San Francisco, 3.88%
9. Denver, 2.76%
10. Minneapolis-St. Paul, Minn. 2.35%
11. Washington, D.C. 2.24%
12. Tampa-St. Petersburg, Fla., 1.65%
13. Seattle, 1.45%
14. Cambridge-Newton-Framingham, Mass. 1.01%
15. Chicago, 0.94%
16. Newark, NJ 0.83%
17. Oakland, Calif., 0.80%
18. Boston, 0.67%
19. Los Angeles, 0.59%
20. New York, NY 0.57%
21. San Diego, 0.40%
22. Miami, 0.37%
23. Orange County, Calif., 0.22%
24. Riverside-San Bernardino, Calif., 0.15%
25. Portland, Ore., 0.06%