Yahoo Finance 15 Cities Where a $100K Salary Isn’t Enough To Afford Rent
Approximately 18% of people in the United States reportedly earn $100,000 or more a year, though the median income is less than half that amount. However, even households with a six-figure income can still struggle with the cost of living, especially if they live in an area with high rental prices.
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In the U.S., the average rent is $1,702 a month for an 897-square foot apartment. Typically, the cost of rent doesn’t include other essential living expenses like power or water. And while this might be the average cost, rental prices can fluctuate greatly as they’re impacted by multiple factors, including location, number of bedrooms, construction quality, apartment age, community amenities and supply. Rent also tends to be much higher in larger or more populous cities than it is in smaller or more rural areas.
As a general rule, it’s important to keep your rent to 30% or less of your monthly gross income. In other words, you shouldn’t be spending more than $2,500 a month on rent if you earn $100,000 annually.
The reason for this is simple. For one, people have other day-to-day costs to consider, like groceries, transportation and insurance premiums. For another, it’s generally good to have some wiggle room in your budget for discretionary spending, like entertainment, dining out, hobbies and travel. Not only that, but keeping your housing costs low — or at least to no more than 30% of your pre-tax income — can make it easier to achieve other financial goals like paying down debt, building an emergency fund, saving and investing.
Recently, GOBankingRates gathered data from Zillow to determine the top 15 cities where people can’t comfortably afford to rent a place on a $100,000 salary. All other data below comes from Numbeo (utilities), Census.gov (population), and the Missouri Economic Research and Information Center (cost-of-living index). Here’s what we found.
15. Pasadena, California
July 2023 rent: $3,027
Annual rent: $36,329
% of annual gross income that goes toward rent: 36.33%
Home to the California Institute of Technology and the Jet Propulsion Laboratory, Pasadena has an estimated population of 134,211. The state of California’s cost-of-living index is 139.70, while basic utilities cost $281.97 a month.
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14. Orange, California
July 2023 rent: $3,042
Annual rent: $36,499
% of annual gross income that goes toward rent: 36.50%
A historic mid-sized city with charm, Orange has an estimated population of 136,178. Utilities cost around $325 a month.
13. Fontana, California
July 2023 rent: $3,044
Annual rent: $36,526
% of annual gross income that goes toward rent: 36.53%
Located in San Bernardino County, Fontana is home to around 212,475 people. Basic utilities are a little cheaper here than in other parts of the state at $179.84 per month.
12. Miami
July 2023 rent: $3,144
Annual rent: $37,725
% of annual gross income that goes toward rent: 37.73%
The state of Florida’s overall cost-of-living index is 101.9, but despite being notably less expensive than California, certain cities — including Miami — are still difficult to afford on a $100,000 salary. Miami’s total estimated population is 449,514. The cost of utilities is just $165.96 a month. Rental prices, however, are on the higher side.
11. Huntington Beach, California
July 2023 rent: $3,162
Annual rent: $37,947
% of annual gross income that goes toward rent: 37.95%
Known for its expansive beaches and surfing, Huntington Beach is a mid-sized city home to roughly 194,310 people. Basic utilities cost $166.85 a month.
10. Boston
July 2023 rent: $3,182
Annual rent: $38,186
% of annual gross income that goes toward rent: 38.19%
The state of Massachusetts has an overall cost-of-living index of 143.1, making it one of the more expensive states to live in. With around 650,706 people, the historical city of Boston is no different. Rent prices go well beyond the 30% rule, while basic utilities are $192.64 a month.
9. Chula Vista, California
July 2023 rent: $3,227
Annual rent: $38,724
% of annual gross income that goes toward rent: 38.72%
Located near San Diego, Chula Vista — aka the “Lemon Capital of the World” — has a population of 279,170. The cost of utilities tends to be higher here, at $231.67 a month.
8. Fremont, California
July 2023 rent: $3,232
Annual rent: $38,780
% of annual gross income that goes toward rent: 38.78%
Within the Silicon Valley, Fremont has one of the most expensive costs of living in the state — and the country. Basic utilities cost $248.06 a month.
7. San Diego
July 2023 rent: $3,251
Annual rent: $39,016
% of annual gross income that goes toward rent: 39.02%
Home to more than 1.38 million people, San Diego is a major tourist destination boasting sprawling beaches and plenty of attractions. For those who live there, however, it’s on the more expensive side of things. Basic utilities alone cost $332.72 a month on average.
6. San Jose, California
July 2023 rent: $3,254
Annual rent: $39,053
% of annual gross income that goes toward rent: 39.05%
Similar in size and price to San Diego, San Jose is located within the Silicon Valley. It’s known for its cultural diversity, good weather, history and more. The typical cost of monthly utilities is $298.23.
5. Jersey City, New Jersey
July 2023 rent: $3,288
Annual rent: $39,451
% of annual gross income that goes toward rent: 39.45%
Jersey City has an estimated population of 286,670. Basic utilities are a little cheaper than they are in other cities on this list — just $166.25 a month. However, New Jersey’s overall cost-of-living index is still higher than the national average at 111.70, making for more expensive housing and other costs.
4. Irvine, California
July 2023 rent: $3,339
Annual rent: $40,068
% of annual gross income that goes toward rent: 40.07%
With about 313,685 people, Irvine is a fairly affluent city with plenty to do — including outdoor and indoor recreational activities. However, rental prices are quite high, meaning you’ll need more than $100,000 a year to live comfortably there.
3. Sunnyvale, California
July 2023 rent: $3,437
Annual rent: $41,245
% of annual gross income that goes toward rent: 41.24%
Another key city in Silicon Valley, Sunnyvale is where the video game industry was founded in the U.S. It’s home to around 153,091 people, making it another mid-sized city.
2. San Francisco
July 2023 rent: $3,485
Annual rent: $41,817
% of annual gross income that goes toward rent: 41.82%
Home to such attractions as the Golden Gate Bridge and Alcatraz, San Francisco is a large city with roughly 808,437 people. Housing prices are higher in this city than in most other places in the country, as are utilities and other everyday costs.
1. New York City
July 2023 rent: $3,693
Annual rent: $44,319
% of annual gross income that goes toward rent: 44.32%
Unsurprisingly, New York tops this list with a typical rent price of $3,693 — more than 44% of the gross income of someone making $100K per year, far more than the recommended 30%. The state of New York has an overall cost-of-living index of 126.60 as well.
Methodology: For this piece, we took July 2023 rent from Zillow and focused on the cities where rent would be more than 30% of a gross income (pre-tax) of $100,000. The 30% rule is a pretty common one in the rental market, but obviously one can go over; you just have less to spend on all other necessities (utilities, healthcare, groceries, transportation) and discretionary spending (apparel, dining out, nightlife, etc.). We stuck to the 300 biggest housing markets.
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This article originally appeared on GOBankingRates.com: 15 Cities Where a $100K Salary Isn’t Enough To Afford Rent
