If you feel like you’ve been priced out of the housing market, you may not have any better luck in the rental market. Rent prices have been rising throughout the pandemic, and it doesn’t look like it’ll change anytime soon.
In a recent analysis, Realtor.com found the median rent for homes with two or fewer bedrooms rose by more than 19% from December 2020 to December 2021 in the 50 largest U.S. metro areas. The rent hike hasn’t been equally impacting every state in the U.S. Rent.com recently found some states saw rent rates jump by more than 50% from 2020 to 2021.
But what’s causing rent to rise? Jon Leckie, a data journalist with Rent.com, said there may be two contributing factors: migration and a hot home-buying market.
“When the pandemic hit, a lot of people left major cities which increased prices in the suburbs and exurbs. But as rents fell in the core metros, people returned, including those who couldn’t previously afford to live in core metros,” Leckie told Nexstar.
This caused demand and prices to increase to levels “at or beyond what we saw before the pandemic.” The pandemic’s impact on housing prices also pushed up rent prices. As would-be first-time home buyers found themselves priced out of the market and stuck in rental properties, Leckie says demand for rentals rose even higher.
When looking at rent price trends throughout the U.S., Leckie found cities like Long Beach, California; Austin; and New York City have experienced some of the greatest year-over-year increases in the average rent prices. He said he believes people tend to seek out cities with a growing economy and jobs, as well as cultural amenities.
Moving forward, those cities that can offer each of these will likely be home to rising rent.
“That’s for both major metros and smaller markets that meet those criteria,” Leckie explained. “Those that will decrease are cities that may have had a pandemic boom due to their natural amenities, but don’t have the infrastructure to support job creation and economic growth.”
Are you looking to move and want to avoid rising rent? You might want to avoid secondary markets and try for the Midwest.
“We’ve seen a lot of increases in areas surrounding Phoenix and other areas around Los Angeles, also in Orlando, Florida, and Portland, Oregon,” Leckie said. “We’re seeing decreases in a lot of Rust Belt cities like Toledo, Ohio; Indianapolis; and Pittsburgh, and in some Midwestern markets like Kansas City, Missouri, and Lincoln, Nebraska.”
While Leckie predicted rent prices will continue to rise through 2022, the rate of growth will likely be slower. The year-over-year percent change appears so high because of a dip in rent prices through 2020.
Rent growth is expected to reach about 7.1% in 2022, slightly lower than what we saw in 2021, according to Realtor.com’s analysis.