“How expensive?” tracks measurements of California’s totally unaffordable housing market.
The pain: Rent hikes outpaced pay raises in 44 of 50 big US metropolitan areas during the past four years – and in four of six metros from California in this study.
The source: My trusty spreadsheet reviewed Zillow’s analysis of the growth in rents vs. increases in average hourly earnings between 2019 and 2023 across the nation.
The pinch
The pandemic economy was not kind to renters. Nationally, rents jumped 30.4% over four years vs. pay hikes of 20.2% – a 10.2 percentage-point cost shortfall for the typical tenant.
Next, consider the Inland Empire’s fast-growing economy. It could not keep pace with the rising cost of being a tenant by the widest margin in California.
In the past four years, rents in Riverside and San Bernardino counties jumped by 41.4% (the fourth-largest bump among the 50 metros). Meanwhile, IE wages rose by 23.3% (No. 7 nationally).
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That meant the Inland Empire’s typical paycheck trailed the monthly rent check by 18.1 percentage points – the 16th worst gap among the 50.
The worst shortfall, nationally speaking? Tampa! Its 50% rent hike (No. 2 of the 50) badly trailed 15.3% raises (No. 27) – for 34.7-point gap.
Pressure points
Three other California markets had smaller but similar gaps.
San Diego: 36.6% rent hike (No. 8) vs. 18.8% raises (No. 18) – trails by 17.8 points (No. 17).
Sacramento: 28.6% rent hike (No. 30) vs. 16.2% raises (No. 26) – trails by 12.4 points (No. 23).
Los Angeles-Orange County: 22.2% rent hike (No. 43) vs. 17.2% raises (No. 22) – trails by 5 points (No. 41).
But the Bay Area – which has suffered significant population outflow in recent years that’s dampened housing demand – wages outpaced rents.
San Jose: 6% rent hike (No. 49) vs. 12.5% raises (No. 39) – ahead by 6.5 points (the second-biggest win for renters).
San Francisco: 3.4% rent hike (smallest among the 50) vs. 12% raises (No. 42) – ahead by 8.6 points (the biggest win).
Good news
At least this budget-busting trend cooled a bit last year, with pay increases in four out of the six California metros outpacing rents.
New construction of rentals plus slightly thinning demand for housing gave renters some pricing power. And a limited supply of workers kept pay hikes elevated.
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San Jose’s 6.6% raises for 2023 beat a 0.8% rent gain. In the IE, 5.9% raises topped 3.1% rent hikes. San Francisco’s 2.6% raises bested a 0.1% rent cut. And LA-OC’s 2.7% raises surpassed 2% rent gains.
But Sacramento’s 1.6% raises were outpaced by 3% rent gains. And in San Diego, 1.4% raises trailed 3.1% rent hikes.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com
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