An increasing number of Austin-area renters are spending more income on housing, new data finds

More Austin-area renters are spending a considerable portion of their income on housing than years past, according to census data analyzed by Harvard University’s Joint Center for Housing Studies and released Monday.

Fifty-two percent of renters living in Austin and the surrounding counties spent more than 30% of their income on housing costs, which include rent and utilities. That is up about 4 percentage points from 2022.

Housing experts have long recommended people spend no more than roughly a third of their income on rent, mortgage and utility payments and have used that number as a benchmark for whether or not housing is affordable.

“Households are paying a large chunk of their income on housing and that leaves less for other necessities like food, health care, saving for retirement,” said Whitney Airgood-Obrycki, a senior research associate with the Joint Center for Housing Studies.

According to researchers’ analysis of data, last year marked the highest percentage of renters spending more than they should on housing costs in at least a decade. The last time Austin-area renters spent this much of their income on rent was 2010, the year following the end of the Great Recession.

Researchers with Harvard also found that low- and middle-income renters have been spending a larger share of their income on rent over the past several years. About 64% of people earning between $30,000 and $75,000 spent more than 30% of their income on rent and utilities in 2019; last year, that number jumped to 77%.

The data also shows that higher-income earners are spending a larger portion of their income on rent than years past. Just over 10% of households earning $75,000 and more spent more than roughly a third of their income on rent, up from about 7% in 2019.

Airgood-Obrycki says this could be by choice rather than necessity; wealthier households could opt to spend more renting a newer or bigger house in a more expensive part of town.

The news that housing costs are consuming a larger portion of renters’ paychecks comes despite falling rent prices. Since May 2023, average rents in the Austin area have decreased as much as 6% year over year, according to MRI ApartmentData. Apartment builders in the Austin area began building in 2022 at a frenzied pace and the opening of thousands of new homes has brought prices down, experts say.

Airgood-Obrycki says one way to explain this discrepancy is by looking at how rent data is collected. Rental data, including that collected by MRI ApartmentData, often consists of monthly rent prices landlords are charging on currently advertised properties. That means the rent paid by someone in the middle of their lease is not being recorded.

“It’s one snapshot of what’s happening,” Airgood-Obrycki said.

Often landlords provide discounted rent through what are called concessions, such as one month rent free. While that discount is recorded by rental firms, it may not be included when renters responding to census surveys are asked how much their monthly rent is.

“Say you got eight free weeks of rent,” said Jake Wegmann, a real estate professor at the UT Austin. “But the headline rent is still $1,400,” even if over 12 months you’re effectively paying $1,167 a month.

Correction: An earlier version of this story misstated the data shown in the second graph.