Here's How Much You Have to Earn Hourly to Afford Rent in Indiana

You likely don't need us to tell you that everything from groceries and gas to car payments and rent have gone up exponentially, but just how much would you have to earn per hour to actually be able to afford rent in Indiana?

Low Interest Rates and High Demand Created a Boom in Indiana and Beyond

In 2020 the Federal Government, in hopes of stimulating the post-pandemic economy, dropped interest rates creating a booming real estate market. If you were house shopping at the time, you may remember that homes were selling in hours instead of weeks or months, and many times for well above asking price thanks to bidding wars between buyers eager to take advantage of low rates.

Rental Prices Continue to Climb Sharply Across America

That crazy housing market seemed to start a trend with property values continuing to climb steeply, and of course higher property values mean that property owners have been able to sharply increase rent prices across the country to keep in line with what is known as "fair market rate."

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What Is Fair Market Rate and How Is It Calculated?

Fair Market Value (FMR) is calculated by The U.S. Department of Housing and Urban Development (HUD) using data from various sources including U.S. Census data, American Housing Survey, and more. HUD considers the FMR to be "the 40th percentile of gross rents for typical, non-substandard rental units occupied by recent movers in a local housing market," and FMR is calculated as an estimate for two-bedroom units only. The agency then uses that estimate to determine FMR on other sized units.

Nationally, two-bedroom units account for 43 percent of the rental stock. Being the most common unit, they are the easiest units for which to obtain data. HUD estimates FMRs for efficiencies, one-bedroom units, three-bedroom units, and units of other sizes using the two-bedroom estimate as a base. - HUD

What Do "Gross Rent" & "Non-Substandard Rental Units" Mean?

When calculating FMR, HUD looks at gross rent which is the total amount a tenant pays when combining rent paid to an owner + utilities like water, sewer, trash, electric, and gas. HUD points out that if the owner pays all utilities for the property, then gross rent would equal the rent paid to the owner. The 40th percentile is calculated with the exclusion of "non-substandard rental units" which include public housing, units newly built in the last two years, and those units considered to be of substandard quality, as well as seasonal rentals, and units located on ten or more acres.

How Much Is Fair Market Rate In Indiana?

HUD recalculates FMR annually for nearly 2,500 areas across the country. Currently, in Evansville, Indiana, for example, FMR for a 2-bedroom is $1,070 - a nearly 10% since 2023 when it was $973, according to HUD.loans. Comparatively, Fair Market Rate for the same 2-bedroom in Evansville was only $793 per month, according to RentData.org. The average FMR for a 2-bedroom unit across Indiana is $942, with the highest ($1,349) in the Indianapolis Metro, and the least ($863) in Adams County.

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FMR Climbing While Wages Stay Stagnant for Many Americans

The current standard for calculating Fair Market Rate has been being used since 1995. The federal minimum wage in the United States has been frozen since we saw the last increase in 2009 when it rode from $6.55 to $7.25. In that same year, FMR in Indiana was $633 - less than half of what it is now.

Full-Time Employees Making Minimum Wage Cannot Afford Rent in the US

Now, while you and I may not be mathematicians, I think we can all agree that the current minimum wage is not enough to cover the cost of renting a 2-bedroom apartment in Indiana. Recent research from the National Low Income Housing Coalition (NLIHC) has confirmed our suspicions. A full-time employee making minimum wage cannot afford a basic rental in a single region of the United States.

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Staggering Statistics for Indiana Workers

The research shared by NLIHC show that a resident of Indiana being paid the minimum wage of $7.25 per hour would have to work a staggering 122 hours per week to be able to afford a 2-bedroom rental, and 101 hours per week to afford a 1-bedroom. To have the "luxury" of being able to afford rent on a 2-bedroom apartment while only working a standard 40-hour work week in Indiana, a person would have to earn at minimum $22.07 per hour.

Forget Thriving - We're All Just Trying to Survive

As property values continue to rise, the cost of goods and services continues to climb, and wages stay stagnant while corporate profits are at an all time high, many Americans across the country and in the Hoosier state are left wondering how they are going to survive.

[Source: HUDuser.gov; RentData.org; NLIHC]