It's often assumed that it's cheaper to rent than buy property, but white hot rental markets in big cities are challenging that assumption.
Apartment rentals in major areas are becoming nearly as costly as frothy home prices, a new report suggests, and require salaries well in to the six figures to maintain a certain standard of living while renting a two bedroom apartment. A study released this week by Smart Asset surveyed markets in 15 big U.S. cities, and the amounts required to live in them. Smart Asset found that rentals fell in only 3 of those markets last year.
Using a federal government formula for housing affordability as a baseline, Smart Asset created a 28 percent rent-to-income ratio to determine how much money households needed to afford rent in all 300 cities. It then broke out which of those cities was the most expensive to live in.
The report confirmed what many residents in large urban areas already suspected: It takes lots of money to live in places like New York City and San Francisco, both of which topped Smart Asset's list of most expensive places to live. Most observers have cited the influence of Silicon Valley as driving up costs in San Francisco, while New York's biggest industry—the finance sector—and a heavily regulated rental market are seen as key factors drives up living costs.