How some in San Francisco and New York manage to pay low rent

The median renter in a pricey city like San Francisco or New York is undoubtedly paying a lot to live there. However, new data show that young, college-educated adults are paying much less than their neighbors in hot real estate markets across the U.S.

Student loan refinancing company Earnest performed an analysis of its loan applicants, who are mostly in their 20s and 30s, and live mostly in popular urban areas. The analysis showed they are not only paying much less than the rents in widely cited surveys, but that they are also spending a much smaller portion of their income on rent than the 30% affordability measure that has become standard in the U.S.

For instance, the average Earnest applicant living in San Francisco pays $900 in rent each month, representing 22% of his or her income. That’s much less than figures of $3,000–$4,000 or more cited by real estate web sites like Zillow, Zumper, and Socketsite, or by urban theorist Richard Florida.

That’s not to say there aren’t apartments listed at crazy high prices in the San Francisco metro area. The company’s study included more than 15,000 people, and Earnest adjusted the data to include only those who earn within $10,000 of the median annual income of their metro area. (The national median income is  $52,250, according to the most recent available U.S. Census survey.) As a result, Earnest’s stats don’t include outliers on the income spectrum who would skew the results.

Admittedly, Earnest spokesman Alan Cooper says its data are not reflective of the entire U.S. population. But the study does offer some interesting conclusions about a very specific slice of that population.

“We’re definitely not trying to say it’s really easy to live in San Francisco or New York—we all know that’s not true,” said Cooper. “But, somehow, people are finding ways to afford living in these high-cost cities.”

They’re probably doing that by piling into apartments with roommates, living with significant others, or moving into less-desirable neighborhoods where rents are more affordable, Cooper said.

The rationale is clear: the most expensive cities also tend to be the most desirable to live in from a career perspective. So, for many of these young, college educated adults, it’s worth living uncomfortably for a few years to have greater earnings potential down the line.

Perhaps unsurprisingly, the metro areas where Earnest applicants spend the highest portions of their incomes on rent–Los Angeles, Houston, and Miami–are also where salaries are lowest.

To see what you’re paying relative to others around the country, check out Fusion’s rent calculator.

Update: This story has been corrected to say that Earnest based its analysis on data from loan applicants rather than customers.

I oversee Fusion’s money section and have spent most of my time as a journalist writing about banks and finance. I live in Brooklyn with my partner Geoffrey & our two dogs, Captain & Tallulah. Favs: leopard print, Diet Coke, gummy candy, Ireland.