The hot — and expensive — housing market isn’t limited to just homebuyers. According to a new report from Redfin, rent prices are on the rise throughout the U.S., putting pressure on many already burdened by rising inflation.
Nationally, the average rental rate in February increased by 15% compared to the same time last year, Redfin’s analysis found. Rising rent costs can largely be blamed on the housing market, which is so competitive in some areas that bidding wars are becoming a common part of the homebuying experience.
“The cost of housing is going up for homebuyers and renters, but it’s going up more quickly for homebuyers,” said Redfin Chief Economist Daryl Fairweather. “That’s because mortgage rates have increased sharply, and will likely continue to do so.”
As owning a home becomes more costly, some buyers are opting to rent instead. That, in turn, is also pushing rental prices up, Fairweather explained.
Unfortunately for renters, many metro areas are seeing rates rise faster than the national average. In Austin, Texas, for example, rent is up 40% since Feb. 2021, according to Redfin. Portland, Oregon, isn’t far behind at 39%.
According to the report, these 10 metro areas experienced the fastest-rising rents over the last year:
- Austin, Texas: +40%
- Portland, Ore.: +39%
- New York City: +36%
- Newark, NJ: +36%
- Nassau County, NY: +36%
- New Brunswick, NJ: +36%
- Fort Lauderdale, Fla. +30%
- West Palm Beach, Fla. +30%
- Miami: +30%
- Denver: +29%
These 10 metro areas were on the opposite end of Redfin’s rent analysis, experiencing the smallest price jumps, according to the report:
- St. Louis, Mo.: +3.3%
- Minneapolis: +3.7%
- Chicago: +4.5%
- Cleveland: +5.3%
- Charlotte, NC: +7.5%
- Detroit: +8.2%
- Warren, Mich.: +8.2%
- Columbus, Ohio: +8.5%
- Anaheim, Calif.: +9.8%
- Los Angeles: +9.8%
Of the most populous metro areas, rent fell in only two: Milwaukee (-2.6%) and Kansas City, Mo. (-1.5%).
Redfin’s full report can be found here.
What to know about rising rent prices
A hot housing market isn’t the only reason for rising rent prices. Jon Leckie, a data journalist with Rent.com, believes there is a second contributing factor: migration.
“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.”
People looking to move — while trying to dodge rising rents — might want to avoid secondary markets and try for the Midwest, according to Leckie.
“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. He noted the year-over-year percent changes appeared extra high because of a dip in rent prices through 2020.