Houston workers hit hard on rents
Report shows roommates a necessity for those who make the minimum wage
A recent report from Zillow found that it would take three full-time minimum wage workers together to afford a standard one-bedroom rental in Houston, underscoring how renters are still getting squeezed despite a broader housing market cooldown.
Zillow’s economists analyzed the 50 largest cities in the United States, comparing the local minimum wage with rent increases.
In Houston, they found that it would take three minimum wage workers, each working 40 hours a week, to share the rent to be able to comfortably afford a standard one-bedroom apartment priced at $1,050 monthly. That is assuming that they wouldn’t be spending more than 30 percent of their income on housing, the standard rule for affordability.
For a typical two-bedroom rental home in Houston priced at $1,265 monthly, it would take about 3.6 minimum wage fulltime workers, Zillow found.
Minimum wage workers in Houston have not been able to afford a typical oneor two-bedroom unit alone for a number of years, but as the U.S. and Texas minimum wage remains stagnant at $7.25 and rents rise, that affordability problem is worsening. In 2018, it took about 2.5 minimum wage workers to afford a one-bedroom rental home in Houston — or almost one less person than it does now.
“It’s been a struggle and a challenge for a minimum wage workers in Houston for some time, but we can definitely see that as rents have gone up so much over the pandemic, that it’s definitely getting more challenging over the course of time,” Nicole Bachaud, senior economist at Zillow, said in an interview.
The federal and state minimum wage hasn’t increased in almost 15 years.
Zillow found that workers in markets with a $7.25 hourly wage are actually struggling more with rental affordability when compared with cities that have established higher minimum hourly wages, even in markets where rents are much higher.
For example, in San Francisco — typically the poster child for expensive housing — it would take about 2.9 minimum wage workers to afford a one-bedroom
rental, slightly less than Houston. Though San Francisco’s typical rents are more than double than those in Houston, that city’s minimum wage is about $16.99.
“We see a lower burden on minimum wage workers in San Francisco, versus a market like San Antonio or Austin (or Houston and Dallas), even though rents are cheaper there. You’d need more full-time jobs or more roommates to afford the typical rental because the income really does make a pretty significant difference,” Bachaud said.
“That was the surprising finding,” she said. “It was like, ‘Oh wow, those actual higher wages, even in super expensive areas, those make a pretty big impact on like the lowest-paid workers.’”
But Houstonians still were better off than renters in many other markets, including the Texas capital.
In Austin, Zillow estimates that it would take four full-time minimum wage workers to afford a standard one-bedroom rental and 5.1 workers to afford a two-bedroom. Austin ranked behind only Atlanta nationally for worst affordability for minimum wage workers renting a one-bedroom unit.
“Realistically, we don’t always see five people sharing an apartment in Austin,” Bachaud noted. “What you’re going to see is people spending way more of their income on rent than they should be, or living in substandard housing or living farther away from where they want to.”
Across all rental units, median rents are about $2,343 in Austin — about $293 more than a year ago — while Houston median rents are about $1,775, about $92 more than a year ago, according to Zillow.
Of course, rising wages aren’t the only path toward affordability. Bachaud noted that expanding housing inventory can go a long way to clamping down on rising rents.
“New construction of rentals is absolutely a way that we can impact affordability because having more inventory is going to be the way that we’re going to be able to see people having a safe, healthy environment that is affordable to them,” Bachaud said. “Houston definitely does do a better job of ” adding new housing.