Detroit named city with largest increase in rent as a percentage of household income
Rent has increased more in Detroit as a percentage of household income than in any other large U.S. city in the last few years, according to a report by the financial tech company SmartAsset.
The report looked at fair market rent across the U.S. between 2014 and 2017.
In 2014, fair market rent was $792, about 37% of the median household income in Detroit. By 2017, it was $1,180 -- almost 47% of income.
A.J. Smith is the vice president for financial education at SmartAsset.
She says Detroit is part of a cluster of Midwestern cities on this year's list.
“When it comes to housing costs, rent costs, compared to income, we are seeing that rent is going up faster than income in these areas,” she says.
Tomie O'Neil is a real estate investor in Detroit who co-owns 20 properties in neighborhoods throughout the city and manages about 80 others.
“[The job] has its challenges… it’s a challenge sometimes in that social-economic bracket to get your rent in on time, all the time,” he says. “But we find good tenants and we work with them.”
O’Neil moved to Detroit in 2016 from New Orleans, where he was also a real estate investor. Incidentally, New Orleans was second on this year’s list for largest increase in rent as a percentage of household income.
Since coming to Detroit, O’Neil has increased rent on his properties a little, but he says his three-bedroom homes are still going for about $800 a month. He does see large increases in the more economically-active downtown and midtown areas, though.
“It's a positive for landlords and investors, because they're making some more money, [but] I think it's always tough for people that rent is such a large portion of their income when rents go up,” he says.
Detroit was 15th on SmartAsset’s list of largest rent increases in 2015, and 5th on the list last year.
O’Neil says he’s seen rent increase even further in 2018, which isn’t included in the most recent SmartAsset report. But he suspects Detroit’s market may be right around its peak.
“We’re up over the top, so we’re going down the other side of the cycle – that’s going to let the steam out of a bunch of stuff,” he says.