[Fox Business] US renters remain burdened, but some metro areas saw relief in first half of year
American renter households remained burdened in the first half of 2023 as tight inventory caused rents to remain elevated, but renters in some metro areas experienced some relief, according to a new report from Moody’s Analytics.
The nationwide average rent-to-income ratio declined slightly in the first half of this year, declining to 30.2% from a high of 30.8% last year – which was the first time ever that median-income renter households paid more than 30% of their income on an average-priced apartment. Renters are considered “burdened” if their rent consumes 30% or more of their gross, or pre-tax, income.
“What that means is, by and large, the U.S. is still rent burdened because we are officially above that 30% rent-burdened threshold,” Lu Chen, a senior economist at Moody’s Analytics specializing in commercial real estate, told FOX Business. “We are seeing levels of relief but also combined with the inflationary pressure elsewhere, so we’re still spending a little higher on the necessities – on food and energy along with other necessary spending.”
US HOUSING AFFORDABILITY AT ALL-TIME LOW
Chen noted that several large metro areas – including New York, Miami, Los Angeles and Boston – are typically always considered rent burdened and remained so in the first half of 2023. In the first quarter, New York had the highest rent-to-income ratio at 64.9%, followed by Miami at 42.5%, Fort Lauderdale at 37.3%, Los Angeles at 35.2% and Boston at 33%.
Two metro areas dropped off the list of most rent burdened this year – Orlando and Tampa. The Tampa-St. Petersburg metro area had a rent-to-income ratio of 29.6% while Orlando’s was 29.9%.
Chen explained that the in-migration those areas experienced in 2021 and 2022, particularly from more populous areas in the northeastern U.S., fueled the rent growth in those cities. In 2023, the growth in the number of households in those areas has been normalizing and standardizing closer to historical averages, which allowed the pace of rental growth to ease somewhat.
RISING HOME CONSTRUCTION COULD BRING RELIEF TO HOMEBUYER STRUGGLES
Areas that are currently experiencing strong population growth and elevated rent burdens include major metropolitan areas in South Carolina – including Columbia, Charleston and Myrtle Beach. Charleston, in particular, saw its average market rent increase by 42.5% since the beginning of the pandemic, which helped drive its rent-to-income ratio to 29.5% at the end of Q2 2023.
The impact of the COVID-19 pandemic and the rise of remote work arrangements is also having an effect on rent growth in areas with tech-heavy workforces like California’s Bay Area.
“The COVID pandemic brought the opportunity of remote working, which is still ongoing … we are seeing much softer rent growth in places such as San Francisco, such as San Jose and many other tech-heavy metros,” Chen said. “It’s because of the luxury of working everywhere, and that really brings people the option of shopping for more affordable units to live.”
HOME PRICES ROSE FOR 4TH STRAIGHT MONTH IN MAY
Chen said that in some of the rent-burdened metro areas [is] a record level of construction of housing in 2023. However, she noted there is a “slow-moving construction pipeline due to some ongoing economic challenges, such as the labor shortage and policy barriers, the higher cost of capital, which potentially some of the projects will have to be pushed off into the early part of 2024 in terms of completion.”
She also noted that the rental market remains challenging for moderate and low-income households, which increasingly have to compete with higher-income peers for Class B or Class C apartments due to the high prices of premium Class A apartments.
The Moody’s report found that low-income renters seeking an apartment at 25% of the market rate would be forced to spend over 50% of their income on rent in a dozen metro areas. The most extreme examples were in New York, where the low-income renters faced a 76% rent-to-income burden, followed by Palm Beach and Miami, which were both roughly 67%.
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Looking ahead, Chen indicated that Moody’s believes the U.S. rent burden is expected to stay roughly where it currently is with a 30.2% rent-to-income ratio for the rest of this year.
“We are unlikely to taper off that 30% rent-burden threshold, but because of this rent moderation and the continuous growth of household income, we are probably now going to have significantly higher rent burdens, so we’re stuck here for the remainder of 2023,” Chen said.
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[Fox Business] Two US tech groups side with TikTok in lawsuit against Montana’s ban
Two U.S. tech groups backed TikTok on Monday in the social media platform’s lawsuit seeking to stop Montana from enforcing a statewide ban on the video-sharing app before the law takes effect on Jan. 1.
In a joint court filing, NetChoice, a national trade association that includes major tech platforms, and Chamber of Progress, a tech-industry coalition, said the state’s “effort to cut Montanans off from the global network of TikTok users ignores and undermines the structure, design, and purpose of the internet.”
TikTok, which is owned by Chinese tech giant ByteDance, filed a lawsuit in May in response to the state ban, claiming the law violates the free speech rights of the company and its users.
The company requested a preliminary injunction, and a hearing is set for Oct. 12.
TIKTOK SUES MONTANA FOR OUTRIGHT BAN OF THE APP IN-STATE
The social media app used by more than 150 million Americans has faced bipartisan calls for a nationwide ban from lawmakers across the country over concerns about the Chinese government’s access to user data since the app is owned by a Chinese company.
TikTok has denied those accusations and said that it “has not shared, and would not share, U.S. user data with the Chinese government, and has taken substantial measures to protect the privacy and security of TikTok users.”
If the ban takes effect, the tech groups argue, it will “usher in a balkanized internet where information available to users becomes regionally divided based on local politicians’ whims or preferences,” adding that “the internet, as a whole, will become fragmented and its value to humanity diminished.”
MONTANA BECOMES FIRST STATE TO BAN TIKTOK; LAW LIKELY TO BE CHALLENGED
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Montana is the first state in the U.S. to ban the app, and its law could impose fines of $10,000 for each violation by TikTok though individual users would not be penalized.
TikTok estimates 380,000 people in Montana use the app – more than a third of the state’s 1.1 million residents.
Reuters contributed to this report.