How Much Rent Should I Really Be Paying to Live in the City?

Angela Colley — It’s Complicated

Dear Its Complicated: I live in L.A., and my husband and I recently decided to relocate to another area of the city to cut down on our commute times and upgrade to a two bedroom. It isn’t lightyears away from where we are now, but the rent seems much more expensive than what I’m used to—which is saying something, since we’re already paying a lot. I’ve been on a pretty exhaustive search for weeks now, but the cheapest two-bedroom apartment I can find (that isn’t truly gross and unlivable) is $4,000 a month–and that doesn’t include utilities or trash and recycling services.

Technically we can swing that financially, but I don’t know if we should. Everything I’ve read says you shouldn’t spend more than 30 percent of your income on all your housing expenses combined. If I add the cost of utilities, internet, and recycling to the monthly rent, we’ll be spending around half of our total income.

Here’s my question: in a major city, is it even reasonable to expect to spend 30 percent or less of my income on housing? And if not, what am I supposed to do otherwise?


You have my complete sympathy.

Last year, after a decade of crazy high rent in a major city, I literally fled to a smaller city nearby so I could buy a house and get out of the rent race. And let me tell you, relocating just because the rent got too damn high isn’t a picnic. (But more on that later.)

Let’s answer your big question first. You’re right—most experts recommend keeping your housing expenses at or under 30 percent of your income. That’s been the golden rule for years, but actually finding a place keeps you within that range is tricky.

“Spending no more than 30 percent of your income is hard if you are making an average wage in a city such as New York or L.A. Let’s say for example you make $60,000 per year in New York City. You can only afford an apartment that is $1,500 per month. That is a price point that is limited in inventory and becoming quite scarce,” says Jessica Swersey, a real estate agent with Warburg Realty in New York.

Realistically, finding a good rental in a decent area of your target neighborhood for thousands less than what you’re seeing now probably isn’t going to happen. But you do have some options to get closer to that 30 percent goal (now or at least in the future).

Option one: Get a roommate

It’s undeniable: “The best way to save is to get roommates,” says Eric Mendelsohn, an associate broker for Warburg Realty. Many renters before you have found ways to stretch that maxim even further by getting creative with their space. “While many buildings no longer allow pressurized or bookshelf walls, there are some that will still allow it. Converting a one bed into a two bed or a two bed into a three bed is an affordable way to live [in an expensive city],” he says.

But roommates come with their own share of drama and, as a married couple, I won’t take it personally if you and your husband don’t heed this advice.

Option two: Ask a pro

As of October 2018, the average rent for a two-bedroom in L.A. is $2,782. Prices can fluctuate wildly between neighborhoods, and you might be able to find something cheaper if you look hard enough. But finding something competitively priced that isn’t also awful is hard – that’s where brokers come in.

“A knowledgeable and experienced broker will instantly know the best buildings for your search and is aware of which management companies have the best reputation,” says Mendelsohn. Keep in mind you’ll have to pay for this service, which will eat into some of your potential savings. But a broker’s fee, unlike rent, is a one-time payment—so if you’re planning to stay in your new home long-term, it might be worth the additional upfront cost in order to lower your monthly expenses.

Option three: Move farther out

The farther you move from the center of the city, the cheaper your rent will be. There’s a couple of reasons for that.

For one, there’s not a ton of competition for the places with the crazy long commutes. Before you commit to leasing on the outskirts, make sure the savings are worth the time you’ll waste stuck in traffic. Two, less populated areas generally have less stuff. Whereas I used to walk to my favorite Mediterranean joint, I now must drive 10 miles past many a fast food chain to eat somewhere similar. And three, people pay a premium for excitement. When you’re farther away from the cultural hub, there’s less going on nearby. Am I bored? Yes, I am.

All joking aside: if you can swing it, moving out of a major city equals major savings. In exchange for a little boredom, I now spend less than half what I used to on living costs—and I own my home.

Option four: Stick it out and hope for the best

While this sounds like a joke option, it really isn’t. In many areas, rent is starting to stabilize, and could even begin to decrease.

“I think we are seeing a rental market trying to hold on to its former glory days of pricing. If you look closely, you will see a lot of incentives being offered by the landlord—most popularly one or two months of free rent. What this does is bring the amortized rent down for the tenant but keeps the landlord’s rent roll high. I think the rental market will soften a bit to adjust. Inventory continues to rise, and people are staying put. It is just a matter of getting the landlords to understand this isn’t the market it was one or two years ago and adjust their prices accordingly,” says Swersey.

In theory, you could sign a shorter lease (say a typical year rather than three years) and wait to see if the market in your neighborhood does decrease, allowing you to jump to a cheaper ship. It is a bit of a gamble though, so be wary.

Whatever you decide to do, take comfort in the fact you’re not alone. Rent sucks for a lot of us right now, and hopefully it will get better soon.