Sometimes renting can be just as difficult as homeownership. The most recent data from the U.S. Census Bureau shows that the average renting household spends 29.9% of their income on rent. Over 10 million renting households spend at least 50% of their income on housing. But those are not the only struggles renters face. The threat of eviction looms for renters struggling to cover costs and many renters, especially in the most expensive cities, are forced into long commutes to find affordable accommodation. This leaves many renters unable to save for a mortgage or for retirement.
Below we look at a combination of these and other factors to find the best cities for renters. Specifically, we included in our analysis the percent of renters who are rent-cost burdened, the percent of housing stock dedicated to renters, entertainment establishment density, crime rate per 100,000 residents, average commute time, unemployment rate and eviction rate. Check out our data and methodology section below to see where we got our data and how we put it together to create our ranking.
Many renters are rent cost-burdened – Even across cities in our Top 10 it is typical to see more than 40% of renters spending at least 30% of their income on rent. Even in Irving, Texas, which has the lowest share of rent-cost burdened renters, over a third of renters spend more than 30% of their income on rent. In Hialeah, Florida, which has the highest percentage of rent cost-burdened renters, around 55% of renters spend over 30% of their income on rent.
The Midwest is a good area for renters – The Midwest leads the way in our Top 10 with four representatives. Madison, Wisconsin takes first, followed by Lincoln, Nebraska in fourth and the Twin Cities in seventh and eighth.
Data and methodology
In order to find the best cities to be a renter, we looked at data for 96 cities. We compared them across the following seven metrics:
Percent of renters who are rent-cost burdened. This is the percent of renter-occupied households who spend at least 30% of their income on rent. Data comes from the U.S. Census Bureau’s 1-year American Community Survey.
Percent of housing stock dedicated to renting. This is the percent of renter-occupied households as a percent of all households. Data comes from the Census Bureau’s 2016 1-year American Community Survey.
Eviction rate. This is ratio of the number of renter-occupied households in an area that received an eviction judgment in which renters were ordered to leave. Data comes from Eviction Labs and is for 2016.
Density of entertainment establishments. This is the number of entertainment establishments as a percent of all establishments. Data comes from the Census Bureau’s 2015 County Business Patterns Survey.
Crime rate per 10,000 residents. Data comes from the FBI UCR database and is for 2016.
Unemployment rate. Data comes from the Census Bureau’s 2016 1-year American Community Survey.
Average commute time. Data comes from the Census Bureau’s 2016 1-year American Community Survey.
In order to create our final index, we first ranked each city in every metric. Then we found each city’s average ranking, giving equal weight to all metrics. Using this average ranking, we created our final score. The city with the best average ranking received a score of 100 and the city with the worst average ranking received a 0.
Tips for switching from renting to buying
Prepare a down payment – While we showed in this article there are plenty of great places to rent, the truth is many renters dream of becoming homeowners. But the biggest hurdle for these renters is saving up enough money to save for a down payment. With home values rising just as fast as rents in many cities, finding some extra savings to afford a down payment can be difficult. It may be worth cutting back on your spending to speed up the down payment saving process.
Get an expert opinion – While there is lots of advice on the internet for how to become a homeowner you can’t beat personalized advice from a financial expert when it comes to securing your long-term financial health. With this in mind it may make sense to talk to a financial advisor about how switching from renting to buying affects your finances. If you are not sure where to find an advisor check out SmartAsset’s financial advisor matching tool, it does the hard work of finding a financial advisor who fits your specific needs.