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NO ZILLENNIALS, YOUR RENT ISN’T TOO DAMN HIGH

Cost-of-living anxiety is fueling headlines and elections as younger voters feel priced out of the housing market, but BCA Research analyst Doug Peta says the data shows they aren't being squeezed as badly as believed.

Comparing rent indexes across a dozen major metros with county-level income data, Peta found income growth has significantly outpaced rent increases over the past five decades.

From 2019-2024, the picture is more nuanced. For the coastal cities that dominate the affordability narrative—Seattle, San Francisco, Los Angeles, Boston, and New York—income growth has comfortably outpaced rent growth.

The real pain is elsewhere, with rent growth outpacing income increases in growing areas including Dallas, Atlanta, Maimi and Detroit, while Philadephia is also a laggard.

This means the popular narrative gets the geography backwards, treating San Francisco, LA, and New York as poster children for an affordability crisis that's actually worse elsewhere.

For example, a recent New York Times story featured a San Francisco couple earning a combined $365,000 who felt priced out of the city. But Peta notes their target rent of $5,000/month would only equal about 17% of pretax income, well under the 30% "rent burdened" threshold

Homeownership data tells a similar story. Under-40 households have kept pace with older generations in taking on mortgage debt since the pandemic and have seen the largest home-equity gains of any age group. Renters, meanwhile, haven't lost out either: since 1975, the S&P 500 has beaten inflation-adjusted home price appreciation by a wide margin.

None of this negates that affordability anxiety is real and politically potent. But BCA's data suggests the coastal-crisis narrative fueling that anger doesn't actually match reality.

(Karen Brettell)

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