This is a quick and dirty R1, mostly because I'm annoyed with housing reporters who refuse to understand how rent and income data actually work.

Anyways, a recent report by Moody's Analytics has come out claiming that the typical renter now spends 30% of their income on rent. This claim, which is particularly striking because it implies the typical renter is rent-burdened (paying > 30% of income on rent), has been making the rounds all across the US media scene --- most notably in a recent piece by the New York Times.

Unfortunately, nobody links to an actual report by Moody's --- just a blog post where they go over their findings. This is problematic because it means I can't actually see how exactly Moody's is calculating it's numbers. The closest thing to a methodology report comes from quotes from the New York Times article, and if what the NYT reports is correct, their methodology is terrible.

So what's wrong with their (reported) methodology, specifically how they calculated their rent to income ratio?

The rent-to-income ratio was calculated by comparing the national median household income, $71,721, with the average monthly rent, $1,794, for 2022.

For starters, that median household income is for all households in the united states. But what you want is median income of renter households, which will typically be much lower. In 2021, the median US household made ~71K, but the median renter household made ~45K while the median owner one made ~86K.* That's a big difference!

The rent figure also makes no sense: median gross rent in 2021 from the 1-year ACS was $1,193. Unless rent has increased by fifty percent in the past 18 months those rent numbers are way off. It's possible they're using median asking rent, which is loosely equivalent to what you'd find if you went on redfin or another rental website and took an average of their listings, but you'd never want to do this because it isn't representative of what a typical renter pays.

For what it's worth the idea that the median renter pays more than 30% of their income in rent might actually be correct: The Joint Center for Housing Studies found that in 2021 46% of renters were rent-burdened (see page 6), so the idea that it's gone up 5% since then isn't that outrageous. It's just that the methodology as reported by the Times is very bad.

I actually hope that Moody's didn't do something this dumb and that the NYT just misquoted them, but it's either really shoddy analysis by Moody's or really bad reporting by the Times -- both of which are bad.

*all Census data from the 2021 ACS 1 year