Renters across the U.S. are beginning to see some relief. As rents continue to decline and minimum wages rise in key metros, the rental market is becoming slightly more affordable—offering hope to those grappling with high housing costs. According to a new Realtor.com® report, the median rent in the 50 largest metro areas dropped to $1,703 in November 2024, marking a $17 decrease from October and a $57 reduction from the peak in August 2022.

While this represents a positive trend, challenges remain, particularly for minimum-wage earners. Here’s what the data reveals about the evolving rental market, and which cities are becoming more renter-friendly.

Nationwide Rent Declines: A Glimpse of Relief

For 16 consecutive months, rents have fallen nationwide, providing much-needed breathing room for renters. Here’s how rents have changed year-over-year for smaller rental properties:

• Studio apartments: Down 1.6% to $1,423—$67 lower than their October 2022 peak.

• One-bedroom units: Down 1.2% to $1,585—$73 below their August 2022 peak.

• Two-bedroom units: Down 1.1% to $1,886—$75 less than their August 2022 high.

Despite these declines, rents remain elevated compared to pre-pandemic levels. The typical rent in November 2024 was 18.1% higher than in 2019, although it still pales in comparison to other economic changes, such as the 22.7% rise in overall consumer prices and a 49.7% increase in the price per square foot of for-sale homes.

Minimum-Wage Workers Still Struggle

For minimum-wage earners, affordability continues to be a challenge despite falling rents. In many cities, two minimum-wage earners splitting rent still need to work well over 40 hours per week to keep housing costs within the recommended 30% of their income.

For example:

• In Nashville, TN, renters need to work 82 hours per week to afford a typical 0-2 bedroom rental.

• In Austin, TX, the number is 79 hours per week.

In contrast, cities with higher minimum wages offer more affordable options:

• In Seattle, WA, where the minimum wage is $19.97 per hour, two renters splitting costs need to work only 37 hours per week.

• Similarly, Minneapolis, MN renters require approximately 37 hours per week to afford rent.

The disparity is largely due to differences in local and state minimum-wage laws. For instance, Tennessee relies on the federal minimum wage of $7.25 per hour, while cities like Seattle have enacted significantly higher local minimums.

Relief in 2025: Rising Minimum Wages and Declining Rents

As of January 1, 2025, minimum-wage increases in 23 of the top 50 metros are expected to bring relief to renters. If rents remain steady at November 2024 levels, minimum-wage earners in certain markets will see a notable reduction in the hours needed to afford rent.

Key markets poised for improvement include:

• St. Louis, MO and Kansas City, MO: Renters here will save approximately four hours of work per week with the new minimum wage.

• Seattle, WA and Minneapolis, MN: Already affordable for minimum-wage workers, these cities will likely see further improvements.

According to Realtor.com economist Jiayi Xu, these changes could offer meaningful relief to renters: “With scheduled minimum-wage increases and a projected 0.1% year-over-year decline in median asking rents for 2025, affordability may improve for many low-income households.”

What These Trends Mean for Renters and Real Estate Professionals

The ongoing decline in rents is a win for renters and a sign of broader economic stabilization. As housing costs make up a significant portion of the consumer price index, sustained rent reductions could alleviate inflationary pressures in the coming months.

For developers and investors, these trends highlight the importance of understanding regional differences in affordability. Markets with higher local minimum wages—like Seattle and Minneapolis—demonstrate how wage policies can directly impact housing accessibility. Meanwhile, areas like Nashville and Austin continue to pose affordability challenges, presenting opportunities to develop affordable housing solutions.

The Road Ahead

While the rental market is trending in the right direction, affordability challenges persist, particularly in areas with lower minimum wages. For real estate investors and developers, these disparities underscore the importance of targeting markets with growing affordability gaps or leveraging areas with rising wages to meet demand.

As rents decline and wages rise, where do you see the greatest opportunities in 2025? Let’s continue the conversation—share your insights and strategies in the comments below!