As I start my fifth decade as a California business journalist, an apology is in order.
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Reflecting on my work, I feel I shortchanged tenants as a topic in my economic coverage. How could I have overlooked a group that comprises almost half the state’s population?
This is a slice of the population, often lacking in wealth, who typically must consider relocating once a year as the lease expires. So if nothing else, swings in rent prices seem far more relevant to many readers’ household finances than, say, gyrations in home values, a more commonly covered topic.
Do homeowners, who enjoy greater stability in their living arrangements, really need frequent updates on real estate values? Well, other than for gossipy purposes?
So, as a sign of seeking forgiveness, I bear a gift for tenants. Call this column the start of “Tenant Talk” – an attempt to provide a weekly snapshot into the tenant’s view of the world.
Four decades of rent
One problem with covering the rental market is a lack of easily accessible historical data.
For example: What were tenants paying in 1986, when I arrived in California? My trusty spreadsheet dug into some Census Bureau stats to build a rough guesstimate – and to see what’s happened since.
Four decades ago, there weren’t annual census reports on key demographic and economic trends. So the spreadsheet created a “mid-Eighties” rent price for each state by averaging what the once-a-decade census report showed for 1980 and 1990.
Can you guess how California ranked when I got here?
Its $452 typical monthly rent was the third-highest among the states and 31% above the nation’s $345 median.
Only Hawaii at $481 and Alaska at $464 were higher. The nation’s rent bargain was found in Mississippi at $245.
Using a similar and now annual dataset, we can see 2024 pricing in the latest census data. Even though that might seem old, it shows an even uglier picture for California tenants in recent years.
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The state had the nation’s highest median rent at $2,036 per month, 37% above the national median of $1,486.
After California came Hawaii at $1,971 and the District of Columbia at $1,954. The bargain? West Virginia at $872.
So, over the four decades, a typical California tenant averaged a 3.9% annual rent increase, the eighth-highest among states and just above the national 3.8% rate.
The biggest hikes were in D.C. at 4.5%, Colorado at 4.3% and Washington at 4.2%. The smallest? Alaska at 2.9%.
Who can afford this?
A rent-to-income ratio provides a rough insight into the growing strain on a tenant’s household budget.
Using my mid-Eighties data, 12 months of the median California rent equaled 21% of the statewide median household income for 1985. That was the second-highest slice among the states and topped the 19% share nationwide.
Only Florida was higher at 22%. The low was in Kansas at 14%.
Flash forward to 2024, and again, it’s worse.
California rent’s share of income rose to 24%, remaining second-highest among the states. The nation was up to 21%.
Again, only Florida’s was higher, this time at 26%. The low was North Dakota at 13%.
Yes, tenants, it’s been an ugly four decades.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at [email protected]
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