U.S Rental Prices Continued To Soar. No Relief in Sight
Americans looking for relief from the increased cost of, well, everything won’t find a salve in the housing market. As gas prices and food costs continue to soar, so too do rents.
The median rent in the country’s 50 biggest metropolitan areas soared 16.7% annually, to hit a new high of $1,827 in April, according to a recent Realtor.com® report. In fact, that price point is the highest in the U.S. since we began tracking rental prices. (Metros include the main city and surrounding towns, suburbs, and smaller urban areas.)
Following a dip in rents brought on by the COVID-19 pandemic and temporary, nationwide tenant protections, rents have been soaring. If price growth rates continue at about the same level, median national rents will break $2,000 per month sometime this summer.
“Rent growth had been really high,” says Joel Berner, senior economic research analyst at Realtor.com. “We expected that to taper off, and it just hasn’t,”
The immediate forecast doesn’t look good for renters. Pandemic slowdowns in construction and more renters leaving their families’ homes and looking for places to live have tightened up the market. That’s enabled landlords to seek higher and higher monthly rents.
The surge in for-sale home prices and rising mortgage rates plus the rash of corporate investors buying up properties have only exacerbated the matter. Many folks who would have bought a home of their own are having a hard time doing so—and are forced to remain renters. That’s keeping demand for rental housing—and the ensuing competition for it—high.
“A squeeze is really being felt, especially by folks who might be first-time homebuyers,” says Berner. “It’s more expensive to [get a mortgage] without a good down payment, but it’s hard to save for a down payment when your rent is spiking.”
Where rents are up the most
Nationally it’s hard to be a renter, but certain regions offer greater challenges than others. Surprisingly, one of those is in the Sun Belt. Cities throughout the U.S. South have seen the greatest year-over-year increases in rent as local real estate markets have boomed.
Florida continues to lead the way as the top three metros in year-over-year rent growth continue to be Miami, at 51.3%, Orlando, at 32.9%, and Tampa, at 27.8%.
The problem is pronounced in Miami, where annual rents have grown a staggering 51.6% since last year. Increased demand has crashed into a relative lack of multifamily rental unit construction in Florida, causing surges in nearly every major city in the state. The challenges in Miami are such that tenants are offering over the asking price for apartments in the hopes of winning in a tough market.
“We’re finding multiple offers on rentals,” says Jeffrey Corriolan, a Realtor® at Miami’s eXp Realty. “If something’s listed for $3,000, they’re offering $3,150.”
Corriolan adds construction is booming in Miami, but the units can’t come on the market fast enough to keep pace with demand. He’s taken to warning clients to get their ducks in a row before making offers.
“If you see a rental, know that it’s not going to be on the market long,” he says. “You’re going to want to put in your best offer and have all your documentation prepared in advance.”
Is there a glimmer of hope for renters?
There are some signs that the surging rental market will level off. With more rentals coming online and price cuts being seen on for-sale listings that are moving less rapidly than during the post-pandemic peak, it’s possible rents will cool down as well.
“At some point, those prices will have to level out,” says Berner. “In the meantime, it’s hard to go from renting to buying. But there are some encouraging signs from a first-time homebuying perspective and that will eventually have an effect on [the rental market].”
Signs of a cool-down are starting to appear, even in ultrahot markets like Miami.
“It does feel like it’s slowing down right now,” says Corriolan. “Instead of there being 10 offers on a listing, it’s five offers right now.”
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