Millennials Can’t Pay Rent in These California Cities Because of the Renter Pay Gap

Los Angeles, San Diego, San Francisco, and three other cities in California have some of the largest millennial renter pay gaps in the country — the gap is the difference between what the average worker can afford against average rental costs.

Among California’s cities, Los Angeles has the largest rent wage gap for millennials, followed by San Diego in third, San Francisco in fifth, San Jose in seventh, Riverside in eighth, and Sacramento in twelfth, according to an analysis Conducted by Filterbuy using data from the General Use Partial Data Model of the 2020 American Community Survey conducted by the US Census Bureau.

In Los Angeles, the millennial wage gap was less than 49.5% in 2020, with millennial renters earning a median wage of $36,649, according to the analysis. However, the renters needed an average wage of $72,560 to pay their one-bedroom rent. The average rent for one bedroom was about $1,814; About 35.6% of the city’s millennials were renters.

San Diego also had a huge pay gap for millennial renters at 39.9%. The median wage that millennials would need in order to purchase a one-bedroom was $69,720, although the median rent for a renter was $41,885. In San Diego, 34.2% of millennials were renters.

Meanwhile, the wage gap for Millennial renters in Riverside was less than 34.5%, with millennials having to make an average of $47,960 to pay for a one-bedroom. In fact, they made a median wage of $31,414.

The researchers calculated the millennial renter’s wage gap by finding the percentage difference between the average wage required to afford a one-bedroom unit without spending more than 30% of wages on rent and the average actual wage for millennial renters in the area. Millennials are defined as those between the ages of 14 and 39 in the year 2020.

While rental prices fell sharply during the height of the pandemic, rents in California rose amid a heated real estate market, causing some cities to enact rent-control safeguards to prevent people from leaving their homes.

Some California landlords were allowed to pay their rent starting August 1 at up to 10%, the maximum annual increase under Assembly Act 1482, a statewide law passed three years ago. But the 10% cap only applies to complexes built before 2007 and those not subject to rent control restrictions, meaning other landlords can raise their rents even higher.

Rent Control Protection and AB 1482 do not prevent California landlords from raising rental rates once the previous tenant moves in. Under the Costa Hawkins Rental Housing Act of 1995, rent control is prohibited for apartments, single-family homes, and buildings built after 1995. It also prohibits “vacancy control,” allowing landlords to raise rent to market rates each time it moves. new tenant in .

Data from the Los Angeles-area Bureau of Labor Statistics Consumer Price Index showed that in July, housing costs rose 5.3% from a year earlier and renters were spending 4.3% more on their primary residence than in July 2021.

Rent is up overall across the US According to the Consumer Price Index for urban customers, the rent index rose 0.7% in July across 75 US metropolitan areas. The Consumer Price Index was calculated using the monthly prices of 6000 housing units and 22000 retail establishments.

After prices fell during the pandemic, the housing market heated up in 2021, bringing the vacancy rate down to 5.8%, the lowest level since the 1980s, according to a report from the Harvard Center for Housing Studies earlier this year.

The report also found that low-income renters, especially those of color, have been hardest hit by income losses during the pandemic and the sudden rise in rents. About a quarter of black renters and 19% of Hispanic renters were late for rent in the third quarter of 2021, compared to 9% of white renters.

In California, single-family zoning is dominated by rental housing, which prevents the construction of more multi-family dwellings and tenants from residing in many neighborhoods. The number of affordable housing units has also shrunk, with the number of units costing less than $600 per month dropping by 3.9 million between 2011 and 2019, according to a Harvard report.

At the same time, wages haven’t increased enough for millennials to save enough rent.

The federal minimum wage has not been raised in more than a decade, since it was last raised to $7.25 an hour in 2009. Democrats have supported the Wage Raise Act, which would increase the federal minimum wage to $15, although the legislation has It has been suspended in Congress since its introduction in 2021.

However, Labor advocates argue that $15 an hour is not enough to address the rise in overall costs.

Shanti Singh, a spokesperson for the statewide tenant advocacy group Tenants Together, also cited Proposition 13, which has imposed strict limits on property tax increases since 1978, as another reason millennials are disproportionately affected as renters.

“We have a strange system of how we tax property and transfer wealth through home ownership that millennials have been left out because of Proposition 13,” she said. “We have laws like Costa Hawkins and vacancy control that puts targets on our backs because landlords are trying to get us out. And then there’s a generational stability difference compared to boomers, and that’s true for all of America.”

Nearly 17 million Californians, about 44% of the state’s population, are renters, but Singh said renters are not reported to the government.

“We have a huge audience that has absolutely no representation,” she said. “Millennials are disproportionately renters in the same way that people of color or single parents are disproportionately renters. I think it has to do with the way we prioritize the interests of landlords on both ends and not make decisions for tenants.”

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