Home prices in America have soared in the last year. Nationwide, prices have moved higher at a clip of about 20% compared to 2021. In some cities, the figure is above 30% or more.
The increase in home prices has been driven by several factors. The first is low mortgage rates, often below 3% for 30-year fixed home loans. (That number had rocketed upward recently). People could afford homes that would have been beyond their reach most years in the past.
Another reason for home price increases, at least in parts of the country, is the new mobility of Americans brought on by the COVID-19 pandemic. The ability to work from home has allowed people to leave large, expensive cities, and move to more affordable ones.
As the demand for homes has risen, so have rents. People who cannot afford a home, or do not want to be tied to a mortgage for several years have moved into the rental market. As is the case with homes, rents vary substantially from year to year.
To determine the ZIP code with the highest rent, 24/7 Wall St. reviewed five-year estimates of median gross rent from the U.S. Census Bureau’s 2020 American Community Survey. The median gross rent across the United States is $1,096, and in these 50 ZIP codes, rents range from $2,834 to more than $3,500.
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California is the home state of many ZIP codes with the most expensive rent. Included are some of the highly affluent communities of Silicon Valley, such as Cupertino, Los Altos, and Palo Alto, as well as the most expensive parts of Los Angeles, San Jose, and San Francisco. New York state also has a large share of expensive ZIP codes. Most of these are part of New York City, especially lower Manhattan.
In the majority of the ZIP codes where rent costs are higher, a higher share of housing units are occupied by renters, rather than homeowners. Nationwide, 35.6% of homes are rental properties. In extremely expensive ZIP codes, that share is at least 60%.
In other expensive ZIP codes, property is so expensive that most residents are priced out of owning, and thereby are forced to rent. Nationwide, the median home value is $229,800. In many of the most expensive ZIP codes to rent, the typical home is worth at least $1 million and can be higher than $2 million.
The ZIP code with the highest rent is 90290. Here are the details:
> Location: Topanga, California
> Median monthly rental cost: $3,500+
> Share of income typically spent on rent: 35.2% — 1,474th highest of 12,186 ZIP codes (tied)
> Rental occupied housing units: 29.2% — 4,875th lowest of 12,186 ZIP codes
> Median home value: $1,070,800 — 191st highest of 12,109 ZIP codes
Methodology: To determine the ZIP code with the highest rent, 24/7 Wall St. reviewed five-year estimates of median gross rent from the U.S. Census Bureau’s 2020 American Community Survey.
We used ZIP code tabulation areas — a census geography type that defines a real representation of United States Postal Service ZIP codes (USPS ZIP codes do not define geographic boundaries but instead are a network of mail delivery routes in a service area). We refer to Census ZCTAs as ZIP codes.
ZIP codes were excluded if median gross rent was not available in the 2020 ACS, if there were fewer than 500 renter-occupied housing units, or if the sampling error associated with a ZIP code’s data was deemed too high.
The sampling error was defined as too high if the coefficient of variation — a statistical assessment of how reliable an estimate is — for a ZIP code’s median gross rent was above 15% and greater than two standard deviations above the mean CV for all ZIP codes’ median gross rents. We similarly excluded ZIP codes that had a sampling error too high for their population, using the same definition.
ZIP codes were ranked based on the median gross rent. To break ties, we used the median gross rent as a share of household income.
Additional information on median gross rent as a share of household income, share of households occupied by renters, and median home value are also five-year estimates from the 2020 ACS.
Click here to read Zip Codes With the Highest Rent
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