Recent college grads have to pay just 28% of their income to afford a typical one-bedroom apartment in Austin – the third-lowest share in the nation
Recent college graduates have a lot to look forward to. Their future is ahead of them as they hunt for a dream job and search for a great place to live. Unfortunately, that last part can be a sticking point.
As rents have skyrocketed since the pandemic, college graduates have had a harder time finding an affordable place to live. But not in Austin, where recent grads now have to spend just 28% of their income on rent.
So what’s happening in the rental market? How did Austin become affordable for recent college graduates? Read on to learn everything you need to know.
Recent graduates in Austin have to pay just 28% of their income on rent to live alone
Recent college graduates have to spend 28.3% of their income to afford a one-bedroom apartment (“live alone”) in Austin, TX. This is the third-lowest share in the nation. Affordability has dramatically improved since 2019, when a graduate needed to spend 35.2% of their income on rent.
Austin is just one of four metros in the dataset where recent college grads don’t have to be “rent-burdened,” i.e. spend more than 30% of their income on housing.
Austin is affordable because of its slumping rental market and moderate median salary. The median rent for a one-bed apartment in Austin has fallen by over $300 in the past year and is now one of the cheapest in the nation, sitting at $1,310. The median salary is $60,277, level with the national median.
Austin has been through a rollercoaster ride in the past five years, significantly affecting housing costs. In fact, in the past 12 months, it has gone from unaffordable (35.2%) to affordable (28.3%) for recent college graduates. While this may seem crazy, it actually makes sense.
Austin was the poster child for booming metros during the pandemic, seeing a huge surge in migration from 2020 to mid-2022. This flood of new money and demand led to skyrocketing housing costs, large inflation increases, and a surge in new construction. However, the metro was severely overvalued. Once the sharp interest rate hikes and return-to-office mandates started in 2023, the city’s fortunes reversed, leading to price drops and population loss. Now, some property managers are having to compete for tenants, and new construction permits have plummeted.
Nationwide recent college graduate rental affordability
Nationwide, recent college grads have to pay 35.7% of their income to afford a one-bedroom apartment. This is down from 39% in 2023, underscoring how rents have stabilized and wages have increased in the past year. Let’s dig a bit deeper.
Generally, asking rents have held steady since late 2023, due to a surge of new construction buoying supply and waning pandemic-era migration hampering demand. This is a major reason why most metros became more affordable for recent college grads in the past year. An increase in wages, especially among low-income groups, has also helped improve affordability – even outpacing historic inflation.
However, even though new apartment construction has helped satiate demand, much of it has been catered to higher-income renters. From 2012-2022, an additional 8.4 million units rented for more than $1,400/month, compared to a decrease of 2.1 million units renting for less than $600/month. $1,400/month is an unaffordable rent for a majority of Americans. And while wages have risen faster than inflation, rents climbed even faster in large metros from 2019-2023, seriously straining budgets.
Even still, America’s renter population is growing three-times faster than its homeowner population, in part because house prices are at record highs. Nearly 40% of U.S. renters don’t believe they’ll ever own a home. Mortgage rates have been falling recently, though, providing a glimmer of hope.
Metro-level highlights
Nationwide, 29 out of the 33 metros analyzed require recent college graduates to spend more than 30% of their income on rent for a one-bedroom apartment. The four most expensive are New York (56.3%), Los Angeles (54.9%), Boston (54.8%), and Riverside (53.7%).
These trends flip when looking at two-bedroom apartments: 27 out of 33 metros are affordable to recent grads, with just the most expensive coastal metros requiring more than 30% of a grad’s income.
San Jose is surprisingly affordable to new grads, despite having the highest rents in the country. This is because a lot of recent grads in the Bay Area are working high-paid Silicon Valley tech jobs, making six-figures right out of college. The median salary for recent grads in San Jose is $108,449, for example.
On the other end of the spectrum, San Diego (67.6%) was the least affordable metro for one-bedroom units in 2023. But rents have dropped significantly in the past year, pushing it down to the number five spot in 2024.
10 Most Affordable Metros for Recent College Graduates
| Metro | 2024: Share of income college grads need to spend for 0-1 bedroom apartment | 2023: Share of income college grads need to spend for 0-1 bedroom apartment | 2024: Share of income college grads need to spend for 2 bedroom apartment | 2023: Share of income college grads need to spend for 2 bedroom apartment | Estimated median salary of recent college grads | Median asking rent: 0-1 bedrooms | Median asking rent: 2 bedrooms |
| Houston, TX | 27.0% | 25.2% | 17.2% | 17.5% | $60,277 | $1,142 | $1,449 |
| Detroit, MI | 27.8% | 28.9% | 17.3% | 19.2% | $60,277 | $1,193 | $1,148 |
| Austin, TX | 28.3% | 35.2% | 17.2% | 21.2% | $62,688 | $1,310 | $1,595 |
| Cincinnati, OH | 29.9% | 28.9% | 16.9% | 16.9% | $59,071 | $1,240 | $1,400 |
| Dallas, TX | 30.5% | 35.4% | 19.3% | 22.6% | $66,305 | $1,347 | $1,707 |
| Charlotte, NC | 32.5% | 37.5% | 18.7% | 21.9% | $57,866 | $1,371 | $1,580 |
| Phoenix, AZ | 32.9% | 38.0% | 19.8% | 22.9% | $56,660 | $1,369 | $1,647 |
| Indianapolis, IN | 33.4% | 34.6% | 18.5% | 21.4% | $54,249 | $1,317 | $1,460 |
| Atlanta, GA | 33.4% | 38.0% | 19.6% | 21.2% | $60,277 | $1,416 | $1,663 |
| Jacksonville, FL | 34.0% | 45.8% | 20.0% | 25.5% | $54,249 | $1,293 | $1,524 |
Table sorted by average share of 0-1 bedroom rentals affordable to recent college graduates
Methodology
According to a Redfin analysis analyzing rents in apartments with five or more units from Redfin.com and Rent.com through July 2024 among the 33 most populous U.S. metros. The analysis estimated 2024 salaries for employed college graduates aged 22-29 (“recent college grads”) using U.S. Census Bureau’s 2022 American Community Survey data and 2023-2024 wage growth data from the Atlanta Federal Reserve. To be included, a grad must have had an annual income of at least $15,000 at the time of the survey.
An “affordable” rental is defined as one where the asking rent is no more than 30% of the local estimated income for recent college grads. Graduates who rent apartments above the 30% cutoff are considered “rent burdened.”
