School is (nearly) out for the summer. That means millions of newly-minted college graduates will strike out on their own to find a job and place to live. Here at Trulia, we’re experts in the latter, so we’ve set out to help new grads find areas where they can afford to rent and still have some money left over to pay back their student loans.
We measure graduate affordability as the share of rental homes on Trulia, as of May 7, 2015, that are within reach of an employed, college graduate between the ages of 22 and 25. Our standard is whether the total monthly payment, including rental payment and insurance, is less than 31% of the metro area’s median income for recent grads. We calculate affordability based on the local median graduate income and rents for the 25 largest rental markets in the US. Thus, what we consider affordable for a graduate varies from market to market.
For instance, in metro Atlanta, the median salary for a new grad is $25,571 per year. If you’re only making this much money, then you can only rent homes that cost less than $661 per month based on the 31% guideline. Sadly, this means just 8.7% of the homes for rent in Atlanta (those listed for less than $661) are within reach.
Want To Pay Less In Rent? Move Inland
Generally, the picture isn’t pretty for recent grads who want to find an affordable place on their own. Those who head to the Midwest and Southern states can save the most on rent. But even in St. Louis, which tops the list of most affordable metros for new grads, just 18.6% of rental units are affordable. And it’s all downhill from there: with the next most affordable areas having less than 15% of affordable rental units. The good news is, you would need no more than one roommate to make the median rental unit affordable in each of five least expensive metros for grads.
| Top 5 Most Affordable Rental Markets for Recent Grads | |||||
| # | U.S. Metro | % of rental units affordable to recent college grads | Max monthly rent payment for an affordable unit | # of roommates needed to make median rental affordable | Median # of bedrooms |
| 1 | St. Louis, MO | 18.6% | $666 | 0.3 | 2 |
| 2 | Dallas, TX | 14.9% | $799 | 0.5 | 2 |
| 3 | Houston, TX | 10.4% | $746 | 0.7 | 2 |
| 4 | Atlanta, GA | 8.7% | $661 | 0.5 | 2 |
| 5 | Phoenix, AZ | 8.0% | $613 | 0.7 | 2 |
| Note: Of 25 largest rental markets. We count any fraction of a roommate needed as a whole person for purposes of making rent affordable. For example, to not break the 31% affordability criteria, a recent grad in St. Louis, MO would need at least 1 roommate to make the median rent affordable. Income estimates are inflation-adjusted to 2015 dollars and originate from the 2013 American Community Survey for college educated graduates between the ages of 22 and 25. Download the full dataset for the 25 largest U.S. rental markets here. | |||||
Go West Young Grad? Only If You Can Pay More
If you plan to head to the West Coast after graduation, then you might want to take a crash course in sticker shock. Less than 1% of all rental units in the bottom five are affordable, and almost all are in expensive California markets. Portland, OR ranks the least affordable with 0.1% of units affordable, followed by Riverside-San Bernardino, CA (0.2%) Orange County, CA (0.2%), Miami, FL (0.4%) and, San Diego, CA (0.4%).
So what’s a grad to do? Although it’s an exciting prospect to get a place of your own right out of college, the cost of doing so may be large. For those not wanting to live with Mom and Dad, there are two options: spend time searching for the few affordable units that are out there (Trulia can help out with that!), or find roommates.
To help with the latter, we’ve crunched the numbers to find out how many roommates a recent grad would need to afford rent, and whether that means sharing a bedroom. In the five least affordable rental markets, a recent grad would need at least two roommates to make the median rental unit affordable, and in Riverside-San Bernardino, CA, that number jumps to three. In all of the five least affordable markets except Riverside-San Bernardino, CA, this means that two individuals would need to share a room, just like during freshman year!
| Top 5 Least Affordable Rental Markets for Recent Grads | |||||
| # | U.S. Metro | % of rental units affordable to recent college grads | Max monthly rent payment for an affordable unit | # of roommates needed to make median rental affordable | Median # of bedrooms |
| 1 | Portland, OR | 0.1% | $479 | 1.5 | 2 |
| 2 | Riverside–San Bernardino, CA | 0.2% | $426 | 2.3 | 3 |
| 3 | Orange County, CA | 0.2% | $666 | 1.9 | 2 |
| 4 | Miami, FL | 0.4% | $666 | 2.3 | 2 |
| 5 | San Diego, CA | 0.4% | $666 | 1.6 | 2 |
| Note: Of 25 largest rental markets. We count any fraction of a roommate needed as a whole person for purposes of making rent affordable. For example, to not break the 31% affordability criteria, a recent grad in Portland, OR would need at least 2 roommates to make the median rent affordable. Income estimates are inflation-adjusted to 2015 dollars and originate from the 2013 American Community Survey for college educated graduates between the ages of 22 and 25. Download the full dataset for the 25 largest U.S. rental markets here. | |||||
SF-DC-NY: How Much Do You Really Need To Earn To Rent?
Want to live like a young professional and not like a fresh-faced graduate? You might want to think twice about moving to a high-wage metro. For recent college graduates looking to live comfortably, moving to a metro where the young and educated earn the most might be a tempting offer. After all, in San Francisco, Washington, DC, and New York, the starting salaries for recent graduates aren’t too far off from salaries of more experienced workers in other metros. These areas also have high rates of employment. So why not pack up and move to The City by the Bay, The District, or The Big Apple? Two words: high rents.
Many of the metros that pay the highest salaries also come with hefty rental price tags. Here’s a look at how grad salaries stack up to the salaries needed to afford median rents. So take notice recent grads, bigger isn’t always better – ‘cause that big salary may not seem so big after you start writing out that monthly rent check.
| Where Grads Need To Earn The Most To Afford Median Rents | ||||
| # | U.S. Metro | Median Income for recent college grads | Income Needed to Afford Median Rent | Median Rent, May 2015 |
| 1 | San Francisco, CA | $41,244 | $137,272 | $3,500 |
| 2 | New York, NY | $32,995 | $121,584 | $3,100 |
| 3 | Boston, MA | $31,552 | $98,052 | $2,500 |
| 4 | Miami, FL | $25,778 | $86,285 | $2,200 |
| 5 | Los Angeles, CA | $25,778 | $85,697 | $2,185 |
| 6 | Cambridge, MA | $31,552 | $82,363 | $2,100 |
| 7 | Washington, DC | $37,120 | $77,461 | $1,975 |
| 8 | Oakland, CA | $27,841 | $76,971 | $1,963 |
| 9 | Orange County, CA | $25,778 | $74,794 | $1,907 |
| 10 | Chicago, IL | $25,778 | $69,421 | $1,770 |
| Download the full dataset for the 25 largest U.S. rental markets here. | ||||
The Cliff’s Notes Of Rental Affordability
The lesson here for recent grads is that although it may be tempting to seek out metros with the highest wages, doing so may not necessarily lead to a better quality of life because these metros also have high rents.
Recent grads need to balance both wages and rents, so places like St. Louis, Dallas, and Houston, fit the bill for affordability. Although the percent of units in these areas that are affordable is under 19%, finding just one roommate is enough to make the median priced rental unit affordable. However, in places like Portland and Southern California, not only are affordable units few and far between, but it takes living in dorm-like quarters to make the median priced rental unit affordable.
