Recent college grads have to pay nearly 45% of their income to afford a typical one-bedroom apartment in San Jose – among the highest shares in the nation
Recent college graduates have a lot to look forward to. Their future lies ahead of them as they hunt for a dream job and search for a great place to live in a new city. 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. This trend is especially pronounced in San Jose, CA, where recent grads have to spend the majority of their income to afford a rental home on their own.
So what’s happening in the rental market? Why is San Jose so unaffordable for recent college graduates? Read on to learn everything you need to know.
Recent graduates in San Jose must pay nearly 45% of their income on rent to live alone
Recent college graduates have to spend 44.7% of their income to afford a one-bedroom apartment (“live alone”) in San Jose, CA This is the seventh-highest share in the nation, and means the typical grad is rent burdened. Affordability has greatly improved since 2019, though, when a graduate needed to spend over 57% of their income on rent.
“Rent burdened” is defined as a household that spends more than 30% of their income on housing. “Severely rent burdened” is a household that spends more than 50% of their income on housing.
San Jose is unaffordable because of its incredibly high asking rents, which are currently the highest in the nation. It costs an average of $2,900 to rent a one-bed. However, when looking at recent graduates with a roommate (i.e. renting a two-bedroom apartment), the typical grad in San Jose is no longer rent burdened and needs to spend just 27.8% of their income on rent. Two-bedroom units cost an average of $3,614.
A very high median salary for new grads somewhat offsets the outsized housing costs, helping make San Jose surprisingly affordable (at least relative to less expensive cities like Miami). 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.
However, not all San Jose residents make nearly as much. Across the entire metro’s population, 53% of renters spend more than 30% on housing costs. Statewide, 20% of California’s entire repopulation spend more than 50% of their income on housing. California has long had the highest poverty rate in the country.
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 buying 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 that are below the benchmark are Houston (27.0%), Detroit (27.8%), Austin (28.3%), and Cincinnati (29.9%).
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. In general, many of the most affordable metros are in the Rust Belt, where housing costs are among the lowest in the country.
One of the most interesting metros in the dataset is Austin, which went from unaffordable (35.2%) to affordable (28.3%) in one year. This 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, 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.
10 Least 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 |
| New York, NY | 56.3% | 58.0% | 35.3% | 36.7% | $72,332 | $2,752 | $3,459 |
| Los Angeles, CA | 54.9% | 63.2% | 35.9% | 40.3% | $63,894 | $2,430 | $3,175 |
| Boston, MA | 54.8% | 57.4% | 31.7% | 33.9% | $72,332 | $2,600 | $3,015 |
| Riverside, CA | 53.7% | 56.7% | 32.6% | 34.4% | $54,249 | $2,068 | $2,450 |
| San Diego, CA | 53.7% | 67.6% | 32.6% | 42.2% | $69,921 | $2,395 | $2,910 |
| Miami, FL | 51.7% | 59.8% | 31.9% | 34.1% | $60,227 | $2,124 | $2,550 |
| San Jose, CA | 44.7% | 49.6% | 27.8% | 30.9% | $108,449 | $2,900 | $3,614 |
| Sacramento, CA | 44.6% | 50.3% | 27.8% | 30.6% | $57,866 | $1,784 | $2,227 |
| San Francisco, CA | 43.7% | 52.4% | 27.0% | 31.4% | $84,388 | $2,420 | $2,994 |
| Orlando, FL | 42.9% | 48.8% | 25.7% | 30.0% | $49,186 | $1,565 | $1,877 |
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.”
