How to Read an Affordability Improvement Claim

Renter affordability is the subject of this final judgment: whether a change in rents, incomes, geography, or payment trouble means that renters are actually better off. The central question is the one that has run through the evidence: can a rent-to-income ratio improve while existing renters feel worse? The answer is yes in the sense that an area-level ratio can look better or deteriorate less when its population changes, but only when the claim is attached to the right population, time horizon, measure, and distribution. The discipline is not to choose one “true” metric; it is to understand what each metric can establish and where it stops.

The answer depends on what is improving

There are at least three different kinds of improvement that can be confused under the word affordability. The first is improvement in a market price: a new tenant faces slower rent growth or a lower asking rent. The second is improvement in an income-adjusted household measure: rent consumes a smaller share of the resources available to the people being counted. The third is improvement in payment performance: fewer observed renters incur a late fee or carry a reported balance. These can align, but they do not have to.

The Federal Reserve evidence shows why the first two can separate geographically. During the pandemic era, the pattern of rent growth was consistent with higher-income remote workers moving from high-rent, high-density areas toward lower nominal-rent places. Remote work allowed some households to keep their jobs while changing where they lived. Their purchasing power entered the destination market, increasing demand and putting upward pressure on new-lease rents.

That mechanism explains why lower-rent places could become more expensive. It does not say that the destination was necessarily the most affordable place relative to local incomes. A household comparing a $1,200 rent with a $2,000 rent may choose the cheaper option even if the lower-rent area’s existing residents have lower incomes. The incoming household may save money, the destination’s market rents may rise, and an incumbent renter may have less room in the budget after renewal. Those are simultaneous outcomes, not logical contradictions.

The study’s comparisons make the distinction visible. Average multifamily rent spending rose from 2019 to 2022 in every pre-pandemic rent quartile: from $775 to $926 in the lowest quartile, from $1,029 to $1,257 in the second, from $1,290 to $1,554 in the third, and from $1,753 to $2,039 in the highest. The percentage increases were 19.4, 22.2, 20.5, and 16.3 percent respectively. The high-rent group saw the slowest percentage growth, but it still had the highest average rent in 2022. The lowest-rent group saw strong percentage growth, but its average rent remained lower in dollars.

When places were grouped by pre-pandemic rent-to-income ratios instead, average rent growth was much closer across groups, ranging from 18.7 to 19.4 percent. That does not make one grouping correct and the other incorrect. Rent quartiles answer a question about the geography of nominal prices. Rent-to-income quartiles ask how prices related to the incomes represented in the area before the shock. The difference between their results is evidence that “cheap” and “affordable relative to local income” were not the same geographic category.

The income-adjusted household results add a second layer. Across the national multifamily renter sample, the median rent-to-income ratio rose from 30.0 percent in 2019 to 32.2 percent in 2022. Among lower-income renters, defined as the bottom quintile of their PUMA’s income distribution, it rose from 63.0 to 79.7 percent. The share of all renters paying more than 30 percent of income in rent rose from 49.9 to 53.5 percent; among lower-income renters it rose from 85.9 to 88.3 percent.

Those results do not prove that every renter experienced the reported change. They do establish that income-adjusted pressure worsened in the measured population, especially among renters classified as lower-income within their local areas. This is why a lower nominal rent or a slower rent increase cannot serve as a complete welfare measure.