Costs have dropped enough over the last year that the typical recent college grad who wants to split a two-bedroom apartment with a roommate in one of the most expensive cities in America can now afford to do so and not be rent-burdened.
That’s per a Redfin study, which reports that now a typical college grad in San Jose would only need to spend 27.8% of their income to rent a median-priced two-bedroom apartment, assuming they’re splitting the rent evenly with their roommate. That’s down from a rent-burdening 30.9% in 2023. The only other cities that switched from unaffordable to affordable in a roommate situation were also in California: San Francisco (26.9%, down from 31.4%) and Sacramento (27.8%, down from 30.6%).
For the study, Redfin examined the price of asking rents from Redfin.com and Rent.com through July 2024, and estimated 2024 salaries for “recent college grads” (employed college graduates aged 22-29) using U.S. Census Bureau data. They defined an “affordable” rental as one where the asking rent was 30% or less of the recent grad’s estimated income. If rent was higher than 30%, the listing was deemed “unaffordable,” because the recent college grads would be rent-burdened.
The good news continues … while the Bay Area is one of the most expensive places to rent in the U.S., it also has the highest salaries for college grads. Even better, rents are softening. The typical recent college grad in San Jose makes an estimated $108,499—the highest of the cities reviewed. And the median two-bedroom asking rent in San Jose fell 1.8% year over year, helping college grads become unburdened by rent. The story is similar in San Francisco, which has the second highest salary for recent grads ($84,388) and saw one of the steepest declines in asking rents (-6.7%).
“A lot of college grads in the Bay Area are working high-paid Silicon Valley tech jobs, which is why they can afford to live in the most expensive place in America,” said Redfin Senior Economist Sheharyar Bokhari. “But affordability remains a huge problem in the Bay Area—which has one of the highest rates of homelessness in the nation—in part because there is a major shortage of housing.”
Rent Is Affordable … With a Roommate
The typical recent college grad would need to spend 20.6% of their income to rent a $1,725 median-priced two-bedroom apartment, assuming they’re splitting rent evenly with a roommate, down from last year’s 22.6%.
Solo living is getting more affordable as well. Typical recent grads wanting to rent a $1,495 median-priced 0-1 bedroom apartment would spend 35.7% of their income, down almost 10% from 39% in 2023.
“Rents are falling in many parts of the country at the same time that wages are rising. That’s why college grads are less likely to be rent-burdened than they were last year,” Bokhari said. “But many Americans, especially those without college degrees, are still struggling to cover rent and are also grappling with increasing utility costs.”
The median U.S. asking rent for 0-1 bedroom apartments fell 0.3% year over year to $1,495 during the three months ending July 31, while the median asking rent for two-bedroom apartments fell 0.7% to $1,725. And wages have risen, with the median salary for recent college grads up 9% to an estimated $60,277, from last year’s $55,300.
Meanwhile, the American dream of owning a home is shrinking. Nearly two in five U.S. renters don’t believe they’ll ever own a home, up from roughly one-quarter in 2023, according to a recent Redfin-commissioned survey. The renter population is growing three times faster than the homeowner population, in part because the affordability crunch isn’t quite as severe in the rental market.
In Austin, The Typical Recent College Grad Can Now Afford to Live Alone
Recent college grads looking to live on their own can finally put Austin, Texas on their list. The Friendly City was the only metro analyzed that flipped from unaffordable to affordable for solo renters, who would need to spend 28.3% of their income for a median-priced 0-1 bedroom apartment, down almost 20% from 35.2% last year.
Rents are cooling in the Texas capital, which had one of the biggest rent drops in the nation: the median asking rent for 0-1 bedroom apartments in Austin dropped 12.6% year-over-year during the three months ending July 31.
Homebuying costs have also decreased, but still not enough to make starter homes affordable. A separate Redfin report found that a family in Austin needs to earn $117,781 in order to afford a median-priced starter home, down 2.5% from a year ago, the only major city analyzed that saw a drop. But Austin households earning the local median income still cannot afford that first home buy.
“Students who graduate from university in Austin—or in parts of the Midwest where rents have always been low—have an advantage because they can typically afford rent in the same town where they went to school,” said Redfin Chief Economist Daryl Fairweather. “But college grads in places like New York, Los Angeles and Boston may have tougher decisions to make. While those places are home to highly regarded universities, graduates will have a harder time finding a local job that pays the rent. They can move to a different city, but then they risk losing their social network and professional connections from college.”
The Most Affordable Cities for Recent College Grads
The best place for typical recent college grads to rent is the home of Skyline chili: Cincinnati, where the typical recent college grad would spend only 16.9% of their income on a median-priced two-bedroom apartment with a roommate. That’s the lowest share among the metros analyzed, followed up by Houston (17.2%), Austin (17.2%), Detroit (17.3%), and Indianapolis (18.5%).
And then there are the six cities on the list where you’ll still be rent burdened even with a roommate: Los Angeles (35.9%), New York (35.3%), San Diego (32.6%), Riverside, CA (32.3%), Boston (31.7%), and Miami (31%).
For grads who want to live alone, the list of most affordable cities is similar, but there are only four metros where the typical recent grad wouldn’t be rent-burdened: Houston (27%), Detroit (27.8%), Austin (28.3%), and Cincinnati (29.9%).
No surprise that the least affordable metro for solo renters is New York, where the typical recent grad would spend a whopping 56.2% of their income to rent the median-priced 0-1 bedroom apartment—the highest share among the metros analyzed. The cities following NYC all land in expensive coastal states: Los Angeles (54.9%), Boston (54.8%), Riverside (54.4%), and San Diego (53.7%).
Click here for more from Redfin’s examination of college grads and rental price trends.
