CT rent is ‘affordable’ if you make $60K — but most don’t
As increases level out, glaring disparities between income, rents persist
Sam Bailey had been eyeing a move from her studio apartment in Hartford to a onebedroom. The 26-year-old lawyer was looking for somewhere she could have a little more space and balance working from home.
She first thought of staying in Hartford. But even with a raise at her job, the rents were too high. So, she looked a little further out to Glastonbury and West Hartford. But that got expensive, too. Eventually, she settled on a unit in Beacon Falls.
“I knew I wanted a one bedroom, but those were getting expensive near me — close to $2,000 (a month),” Bailey said. “When I first moved to my place in Hartford, I wasn’t worried about rent. But then things started getting crazy
expensive.”
Like many renters in the Nutmeg state, Bailey had to concede and compromise to find a new apartment. First went the commute, then amenities. Then the tough talks about maybe finding a roommate or moving back home with her parents to save to buy a home. Eventually, her plan to own a home had to be placed on hold as well.
“I had a timeline. I would rent for a year or two, then I’ll buy a place,” she said. “I don’t think that’s going to happen. I don’t think I’m going to be in a place next year where I can afford to buy.”
According to the United States Department of Housing and Urban Development, rent affordability is calculated at 30 percent of gross income. According to data from real estate tracking company CoStar, the average apartment rent in the Hartford-West Hartford-Middletown metropolitan statistical area, or MSA, was $1,497 at the end of the third quarter of 2022. That means the average annual rent is $17,964. In order to meet the federal standard for housing affordability, a renter in the Hartford MSA would have to make $59,880 — nearly $60,000 — in order to afford rent in the Hartford area.
But, according to the U.S. Census, the median household income for renters in the Hartford MSA is only $42,545.
The disparities between average rent and the median household income of renters across the state is echoed across Connecticut’s three other MSAs as well.
In the New Haven-Milford MSA, the average rent was $1,640 monthly or $19,680 annually, according to CoStar. Renters there would have to make $65,600 to afford rent. But Census data shows a median household income of $41,401 among renters.
In the Norwich-New London MSA, which has the lowest average rent in the state at $1,474 ($17,688 annually), a renter would need a salary of $58,960 for rent to be considered affordable. Census data says Norwich-New London renters have a median household income of $44,652.
In the Bridgeport-Stamford-Norwalk MSA, where rents severely outpace the rest of the state at $2,575 ($30,900), renters need a salary of $103,000 to afford rent. There, the median household income among renters is only $54,060.
Comparing what HUD considers an affordable salary to the actual household income of renters, Connecticut renters earn an average of $26,000 less than needed per household in order
Rent-income disparities were only exacerbated over the last two years as rent increases launched to record heights during the COVID-19 pandemic.
“This was a generational moment in time triggered by a preceding black swan event,” Chris LeBarton, a director of market analytics for CoStar, said. “The conditions were ripe for this type of rent growth to occur.”
One of those conditions was inventory. Something Connecticut has struggled with.
“Because there was so little new construction, rental housing was always super tight (in Connecticut),” Jay Lybik national director of multifamily analytics for CoStar, said. “You’d see rental rate increases year over year that were pretty consistent, and they were typically higher than the national average.”
Realtors have seen it as well. Jessica Hoover, who works with William Raveis’ the One Team, said even finding units has been difficult. A red-hot housing market forced a lot of would-be homeowners into the rental market either because they were priced out or decided to wait until the market cools to buy again. Apartments, Hoover said, became harder to find. And when they were found, a potential renter needed a near perfect application to even be considered.
“The biggest issue is inventory in rentals. That’s due to people selling homes to take advantage of the market. They’re in rentals temporarily and they’re like, ‘Let’s sell high and figure it out later,’” Hoover said. “It takes up a lot of time for, unfortunately, no results unless they have a five-star application with an 800 credit score. Even if that’s who you are, you have to get into the listing in the first couple of days.”
When the pandemic hit and the nature of work changed, furthering the inventory problem. Most companies switched to remote work. And even as offices opened up, many companies — like Bailey’s — only required employees in once or twice a week. As the trend continues, renters who worked in bigger cities are finding less expensive housing options with comparable amenities in smaller market cities.
Bailey said she wonders who is living in the units going up in cities like Hartford. Even at a salary of $77,000 she said she couldn’t qualify for a onebedroom apartment in Hartford or Glastonbury without a cosigner to meet the 30% threshhold.
“These things are priced with no one in mind. The people who actually live here, they’re not thinking about them,” Bailey said. “There’s some nice buildings in Hartford and the rents are really expensive. Who is living in these? Not the residents of Hartford. People who work in Hartford cannot afford to.”
LeBarton said some of that is because of an influx of remote workers from cities like Boston and New York.
“In the seaport in Boston, you have some of the most expensive rentals in the country,” LeBarton said. “If you look at a four-star apartment building in Hartford and a four-star building in Boston, they should have the same amenities, the same administration, the same landscaping, the same set of concierge services. But that four-star in Hartford is going to be by orders of magnitude cheaper.”
And LeBarton said someone who might work in the financial sector in Boston and is now untethered from an office would see a Hartford rent as a “drop in the bucket” compared to larger cities.
Hoover said a change in social behavior brought on by the pandemic also affected the influx of renters.
“Why would you be paying $3,500-a-month for a studio apartment in Manhattan when the pandemic was going on with nothing open and you’re confined in that area. But you could rent something for half that and go to the beach, go to the woods roam free,” she said. “You could be in a place where you’re not confined. You can just hop a train back into the city. A lot of those people came to Connecticut.”
Low inventory and high demand pushed rate increases to record highs during the pandemic. Yearover-year rents increased nationally at rates between 2 and 3 percent from 2017 until the end of 2019. In the Hartford metro area, where you find some of the state’s lower rents, that number was a little lower. It hovered between 2 and 2.5 percent. But in the affluent Stamford metro area, which encompasses Fairfield County, the rate was even lower, staying between 1 and 2 percent. By the end of 2021’s second quarter, the national average rent increase shot up to 7.2 percent. In New Haven it was 6.8 percent, Stamford saw it rise to 7.2 percent. Those high rates continued through 2022.
But projections from CoStar show “good news” for renters, LeBarton said. The second half of 2022 saw increase rates finally dropping. Some rents have even dropped, if ever slightly, as the year ends. Barring any other major world event, CoStar projects rental increase rates will drop, returning to historical levels through 2027.
“You can only push the envelope so much for so long,” LeBarton said. “Just like conditions were ripe in ’21 for outsized demand, outsized rent gains, you’re seeing demand pull back markedly. As a matter of course you’re then seeing annualized rent growth slowed. The renter in many ways has been priced up to a degree that they have never been before. I would think it would be fair to say that for the rental market, anyone who is looking for apartments would see this as good news.”