A new report confirms that a significant exists between Ohio renters' incomes and their housing costs. Photo: George Becker, Pexels

When will Cincinnati’s rent increases end? Photo: George Becker, Pexels

That old rule about keeping your housing costs under 30% of your pay? For renters, that’s going out the window this year — that is, if it hasn’t already.

According to a new report by Zillow, renters will give more than 30% of their income to their landlords by the end of 2021, which is considered housing-cost burdened. Nationally, Zillow predicts that rents will go from 29.96% of a person’s monthly or yearly income to 30.2%.

Wages largely have remained stagnant or even have dipped throughout the COVID-19 pandemic and in previous years, which could spell trouble once the predicted housing share increase takes hold. Zillow explains:

By the end of the year, assuming current rent and income growth trends largely hold, Zillow expects that share to rise to 30.2% — above the 30% threshold at which a resident is defined as “housing-cost burdened,” at risk of not having enough income left over each month to adequately afford other life costs beyond housing. That 30% threshold is not just an arbitrary number, either — previous Zillow research found that once a community’s median rent affordability figure exceeded 32%, local rates of homelessness and housing insecurity should also be expected to begin rising precipitously.

The 30% guideline originated a century ago in public housing assistance programs, reports financial and career website The Balance. The marker was last updated in the 1980s but hasn’t been readdressed in the recessions or housing rollercoasters of the following decades. Theoretically, keeping housing costs below 30% will still leave room in a person’s monthly budget for other bills, food, savings, emergencies and “life stuff.”

But that guideline hasn’t kept up with inflation, hasn’t been adjusted for today’s paychecks or housing crunches, and doesn’t account for student loans or other burdens that weren’t big considerations before 1980, The Balance says. Previously, only renters in select metropolitans like New York City would be forced to rent at more than 30% of their income.

Now, though, things are different, with previously affordable cities soon to require more than 30% of a person’s income for adequate housing.

“Renters in Miami, for example, should currently expect to spend 39.3% of their income on the typical local rental — rising to 40.3%, a full percentage point more, by the end of the year. In June, the typical rent burden was 30% or more in 18 of the nation’s 50 largest metros — by the end of the year, Phoenix, Buffalo, and Seattle will also join that list, bringing the total to 21,” Zillow reports.

In Cincinnati, the overall median rent was $1,200 per month in June, according to a report from Realtor.com. That was a 17.1% increase since June 2020 and well over the $865 statewide average that the Out of Reach report cited.

According to Zillow’s new report, Cincinnatians spend more than 26% of their income on rent. Zillow predicts that could stay relatively flat until December. But monthly rents in Cincinnati have been rising steadily for months. In May, Cincinnati had one of the highest rent escalations in the nation.

Local rents increased for studios, one-bedroom apartments and two-bedroom apartments in June, a recent report from Realtor.com says. At that time, people in Greater Cincinnati paid $1,025 per month for a studio, $1,155 for one bedroom and $1,275 for two bedrooms. That equates to studios going up by 2.5% over the last year, single bedrooms by 12.7%, and doubles by a whopping 21.4%.

Throughout Ohio, there’s been a growing divide between the average rent and the average paycheck. Earlier this year, the 2021 Out of Reach report showed that the fair-market rent for a two-bedroom apartment in Ohio is $865. In order to afford that level of rent plus utilities, a household must earn at least $16.64 cents per hour — nearly $2 an hour more than the average renter earns per hour.

Bill Faith, executive director of the Coalition on Homelessness and Housing in Ohio, noted that $895 is more than what workers in six of the 10 most common occupations in Ohio earn.

“Salespeople, cashiers, restaurant workers, hotel workers… those are also the jobs that were hit hardest by the pandemic, so their situation may be even worse,” Faith emphasized. “There’s many people struggling just to keep a roof over their head in these times.”

Faith added that the costs of rent are being driven higher by the increase in home prices and that the situation is likely worse, as the report’s data was collected prior to the COVID-19 pandemic and doesn’t reflect the economic challenges spurred by the situation.

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This article appears in Aug 18-31, 2021.