California’s coastal rental costs highest in the U.S.
(The Center Square) – According to the 2023 Out of Reach Report from the National Low Income Housing Coalition, the SF Bay Area and adjacent coastal region are the least affordable for renters nationwide. Metro areas comprising Santa Clara and Monterey counties and the Santa Cruz and San Francisco metros are the top four.
In Santa Cruz-Watsonville, the Housing Wage (HW) is $63.31 to rent a two-bedroom apartment. In the SF Bay Area, renters require a $61.31 HW for a two-bedroom apartment. Meanwhile, the HW in San Jose-Sunnyvale-Santa Clara is $56.56 to rent a two-bedroom apartment.
The rental affordability issue is stark statewide. “In California, the Fair Market Rent for a two-bedroom apartment is $2,197,” according to the report’s authors. “In order to afford this level of rent and utilities in California—without paying more than 30% of income on housing — a household must earn $7,323 monthly or $87,877 annually. Assuming a 40-hour workweek, 52 weeks per year, this level of income translates into an hourly wage of $42.25.”
The Golden State’s minimum wage is $15.50 an hour, with increases set annually. By this math, a two-bedroom apartment renting for $2,197 monthly would require the annual income of about three minimum-wage workers laboring 40-hours a week, over 52 weeks.
In the Golden State, market imbalances rule. The demand for rental housing far exceeds the supply, a burden that falls on low-wage workers particularly.
“Across California,” according to the annual NLIHC report, “there is a shortage of rental homes affordable and available to extremely low income households, whose incomes are at or below the poverty guideline or 30% of their area median income. Many of these households are severely cost burdened, spending more than half of their income on housing. Severely cost burdened poor households are more likely than other renters to sacrifice other necessities like healthy food and healthcare to pay the rent, and to experience unstable housing situations like evictions.”
While the minimum wage in the Golden State of $15.50 an hour is double the federal minimum wage of $7.25 an hour, rental housing affordability is a national problem.
“In no state,” the annual NLIHC report continues, “metropolitan area, or county in the U.S. can a worker earning the federal or prevailing state or local minimum wage afford a modest two-bedroom rental home at fair market rent by working a standard 40-hour work week.”
