Median Rent Is Now Under $2,000 per Month. Are You Overpaying?

There's no need to spend more money on rent than you can afford.

There's a reason rent prices rose in 2022. Last year, a combination of elevated home prices and mortgage rates drove many would-be buyers out of the real estate market. Those people still needed a place to live, though, so they sought out rentals. And that uptick in demand drove the cost of rent upward in a serious way.

But thankfully, rent growth slowed a bit in December compared to November, as per recent Rent.com data. That month, the median rent price dropped to $1,978, representing a 1.41% dip from November and the lowest median price since April of 2022.

That said, in December, rent prices were still up 4.77% year over year. And many people are still struggling to afford housing given the way prices have been surging.

That's why it's so important to make sure you're getting a fair price for your rental.

Don't overpay needlessly

Let's get one thing out of the way. While $1,978 might represent the median national rent payment in December, in some parts of the country, that will barely get you a studio apartment. In other parts, meanwhile, you might pay considerably less than $1,978 for a comfortable two-bedroom home.

That's why it's more important to focus on your local rental market than the national median rent. If you're living in New York City and paying $1,978 a month for a decent-sized apartment in great shape, you're getting a fabulous deal. But if you're living in a much smaller city where the typical apartment rents for $1,200, then paying $1,978 means you're likely getting ripped off -- either that, or you may be paying for more amenities than you need.

So how do you know if your rent is fair? It's simple: Do some research. Talk to real estate agents and brokers in your area to get their take, and look at as many similar properties as possible to see how your rent compares. If you're paying more than renters in similar homes or apartments, and your neighborhood and amenities don't make the extra cost worth it, then you should consider moving when your lease is up.

You may also be able to renegotiate your lease when the time comes to renew. Show your landlord the average rent for similar properties in the area and make a case for lowering your rent. If you're in an apartment complex, look for similar apartments on the property that are available for a lower cost. Then tell your landlord you'd like to move into the other, cheaper unit unless they can lower the rent for your current unit. They just might say yes.

Remember that you have some leverage in these negotiations: Your landlord will probably want to keep you if possible, as they will lose money every day your unit sits empty.

Make sure you can afford your rent

If you're in the market for a new rental, then it's essential that you do your research to figure out the market rate for homes in your neighborhood. But it's also important to know how much rent you can afford personally.

To that end, try to limit your rent to 30% of your take-home pay. If you bring home $5,000 a month after taxes and other deductions, your goal should be to keep your rent payments to $1,500 or less.

Now, there is some wiggle room with this formula. Let's say you're moving to a city that won't require you to have a car. That means you won't have to deal with a monthly auto loan payment, gas, maintenance, parking fees, or car insurance. In that situation, it might be OK to spend 35% to 40% of your take-home pay on rent, or even a touch more if doing so means getting access to a safe, comfortable home in a convenient location.

But otherwise, do your best to limit your rent payments to 30% of your take-home pay. That could help you avoid a scenario where you start to fall behind on your rent payments or other bills.