With millions of recent college graduates about to flood the rental markets of big cities, some will be in a much better situation financially than others, at least when it comes to being able to pay the rent. It just depends on where they choose to live.
A new study using U.S. Census Bureau salary data from college graduates ages 22 to 25 and rental pricing analysis from Trulia shows that some rental markets are nearly unattainable for the typical recent grad making the city's median income, especially if they want to live alone.
Portland, Oregon, topped the list of least affordable cities for this age group making the city's median entry-level salary of $18,560, so it's probably lucky that Portland is where young people go to retire. It would take median earners 1.5 roommates to be able to afford the city's $1,245 median rent, and only 0.1% of rentals on the market are affordable to this cohort. In fact, the salary needed to afford Portland's median rent is $47,653, nearly three times the median income of recent college graduates there.
In Orange County, California, and Miami, the situation isn't much better. With median rents of $1,907 and $2,200, respectively, recent grads will need to earn much more than the cities' median income of $25,778 to live roommate-free.
In New York, where the median rent is a staggering $3,100, somebody earning the average recent grad salary of $32,995 per year would need 2.6 roommates to afford the rent. To live alone, a person would have to earn $121,584. In Los Angeles, median rent was nearly $1,000 cheaper, but the median income of the 22- to 25-year-old set is $7,000 less than in New York.
And while San Francisco had the highest median rent at $3,500 per month, recent grads also earned the most there ($41,244), and 3.9% of rentals were affordable to the city's median earners.
So where should you move if you want to have an affordable apartment or rental home? St. Louis ranked as the most affordable rental market, with 18.6% of units on the market affordable to recent grads making the median income of $25,778. And with a median rent of just $868, it would only take 0.3 roommates to make rent, or a salary of $34,053 to live alone.
Dallas is a close second. With a median rent of $1,197, it would require someone earning the average fresh graduate salary of $30,933 just half a roommate to make rent.
So if you don't yet have a job dictating where you'll start your career, it may be best to avoid the big coastal cities, which Trulia calls the "high-wage metros." After all, New York's $1,795 shower-in-the-kitchen apartment has recently been taken off the market.