Home prices in America have soared in the past 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, before the numbers 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 town 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 (ACS). The median gross rent across the United States is $1,096, and in the towns we considered, which we define as having populations between 1,000 and 25,000 residents, rents range from $2,467 to more than $3,500.
Of the universe of 50 towns we considered with the most expensive rent, California has by far the most, with 24, followed by Hawaii, with seven and New York and New Jersey with six each. Included are some of the highly affluent suburbs of the nation’s major cities such as Scarsdale, New York (one of the many wealthy New York City suburbs in Westchester County) and Topanga, California (a well-to-do, artist-friendly community on the outskirts of Los Angeles).
In some of the towns where rent costs are higher, a larger share of housing units are occupied by renters, rather than homeowners. Nationwide, 35.6% of homes are rental properties. In 12 of the towns we considered, that share is at least 60%. This is largely because these places have more expensive housing markets as a whole, meaning residents are priced out of the possibility of owning a home and are forced to rent. Nationwide, the median home value is $229,800. In all but four of the towns we reviewed with available data, the typical home is worth more than double this, and 18 towns on this list have a median home value in excess of $1 million.
While rents in these markets are much higher than the national figure, renting property is actually in many places relatively affordable, after accounting for the typical resident’s income.
The most expensive town to rent a home is Topanga, California. Here are the details:
- Median monthly rental cost: $3,500+
- Share of income typically spent on rent: 36.3% (tied for 623rd highest of 5,275 towns)
- Rental occupied housing units: 25.1% (785th lowest of 5,275 towns)
- Median home value: $1,124,200 (38th highest of 5,198 towns)
Methodology: To determine the town with the highest rent, 24/7 Wall St. reviewed five-year estimates of median gross rent from the ACS.
We used census “place” geographies, a category that includes incorporated legal entities and census-designated statistical entities. We defined towns based on population thresholds: having at least 1,000 people and less than 25,000 people.
Towns 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 town’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 town’s median gross rent was above 15% and greater than two standard deviations above the mean coefficient of variation for all towns’ median gross rents. We similarly excluded towns that had a sampling error too high for their population, using the same definition.
Towns 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 see all the towns with the most expensive rent.
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