Since the COVID-19 outbreak, the past two years have been a rollercoaster ride for the rental market. From a slowdown in 2020 during the onset of the pandemic to a significant rebound in 2021 under a mix of factors, rents have maintained a feverish pace of annual growth, according to the latest realtor.com® Monthly Rental Report released April 14,
In March, the U.S. median rental price climbed to $1,807, marking a 19.3% increase in the two years since the onset of the pandemic. The report also marked the eighth consecutive month of double-digit annual rent gains (+17.0% YoY).
Among unit sizes, studio rents increased at the fastest annual pace, up 16.9% (+$215 YoY) to a median of $1,483. Larger unit rents also posted double-digit gains over March 2021: 1-bedrooms, up 16.3% (+$232 YoY) to $1,659; and 2-bedrooms, up 16.4% ($286 YoY) to $2,028.
As U.S. renters continue their bout with housing affordability issues, the upward trajectory of rents, while persistent, has also moderated slightly compared with previous months.
Regional breakdown:
Sun Belt: Arguably some of the most coveted areas for buyers during the past two years, metro markets in the Sunbelt states also topped the list of fastest-growing rental markets from March 2020 to 2022. Miami led the way with an increase of 58% since March 2020. Riverside, California and Tampa, Florida were close behind, climbing 48.2% and 45.8%, respectively.
Big Tech Cities: Cities with a heavy tech industry presence accounted for five of the ten slowest-growing rental markets compared to relatively more affordable areas over the past two years. While rents in the San Jose, California market remained essentially unchanged from March 2020 levels (+0.1%), it still topped the country’s highest median rent list at $3,075. San Francisco wasn’t far behind with a 0.3% and a median rent of $2,982.
The Takeaway:
“With asking rents nearly 1.2 times higher than two years ago, our March data highlights rising rental affordability challenges faced by many Americans today,” said Realtor.com® Chief Economist Danielle Hale. “At the same time, March rental trends offer early signs of relief from the feverish pace of rent growth, which moderated year-over-year for the second month in a row. We expect cooling to continue over time, but the jury is still out on whether rent growth will hit single-digits by the end of 2022. This is largely due to the mismatch between rental supply, with vacancy rates at record lows and demand rising as some would-be buyers potentially turn to renting in the face of higher home prices and mortgage rates. While the jobs market is strong, it’s unlikely that we’ll see enough income growth to keep rents under 30% of monthly paychecks—especially with higher inflation and everyday costs. Still, there is a silver lining for renters, as rents won’t be able to sustain an accelerated pace if incomes can’t keep up.”
“With booming employment and the growing back-to-office wave stoking demand, big rents are back in big tech cities. Still, our March data suggests select tech hubs like San Francisco might still offer bargains on studios relative to pre-COVID rents. And for some, such as Gen Zers striking out on their own, even small rental savings could make a large difference,” said George Ratiu, Realtor.com® senior economist & manager of economic research. “Regardless of your stage of life, with rising prices taking a bigger bite out of paychecks, it’s important to stay focused on financial health by keeping rental costs to a smaller percentage of your take-home pay. A tool like the Realtor.com® Rental App can help you customize your search and get alerts about newly-listed rentals in your budget.”
Jordan Grice is RISMedia’s associate online editor. Email him with your real estate news ideas at jgrice@rismedia.com.
