R
enters across the US have reason to be optimistic: median rent prices declined in November. According to Realtor.com's latest report, the median rent for the 50 largest metros was $1,703, down $17 from last month and $57 from its peak in August 2022.

    The decline is a hopeful trend in rental affordability, particularly for minimum-wage earners. The median rent for 0-2 bedroom properties dropped by $19 year over year, or 1.1%. This decrease may bring significant relief to renters, especially with the minimum wage set to rise in 2025.

    Renters saved last month across the board, with smaller properties seeing the largest percentage drop in rents. Studio apartments saw a 1.6% year-over-year decline, while one-bedroom units dropped by 1.2%. Two-bedroom units decreased by 1.1%.

    Despite these declines, Xu notes that rents have risen significantly since before the COVID-19 pandemic. However, this increase is less dramatic when compared to other economic changes over the same time period.

    The rise in rents "pales in comparison" to the 49.7% increase in the median price per square foot of for-sale home listings in the five years ending November 2024. Starting January 1, 2025, minimum wage increases in 23 of the top 50 metros are expected to bring some much-needed relief.

    Minimum-wage workers still face an uphill battle when it comes to comfortably affording housing. In eight of the 10 markets analyzed, two minimum-wage workers splitting the rent would need to work more than 40 hours per week to keep housing costs within 30% of their budget.

    Nashville and Austin lead the list in the highest number of hours minimum-wage earners need to clock in to afford the typical rent. Paying rent in these cities takes two minimum-wage workers working an untenable 82 and 79 hours per week, respectively.

    However, in cities like Denver and Phoenix, two minimum-wage earners with fewer than 40 hours of work per week can afford a typical 0-2 bedroom rental unit. In Minneapolis and Seattle, they need to work approximately 37 hours per week to cover the cost of a similar rental unit.

    The disparity in working hours required to afford rent across cities is primarily due to differences in minimum-wage laws. For example, Seattle has its own minimum-wage law setting the minimum wage at $19.97 per hour, while Tennessee does not have a state minimum-wage law, so the federal minimum wage of $7.25 per hour applies.

    If rents remain consistent with November 2024 levels, minimum-wage earners in eight markets will see at least a two-hour reduction in the weekly work hours needed to afford rent. St. Louis and Kansas City are leading this relief, where minimum-wage workers will save approximately four hours of work per week once the minimum rises to afford rent.

    The sustained rent decline is a win for renters and a positive indicator of broader economic trends. However, challenges remain, particularly in markets where the federal minimum wage persists.