Rents Rise Across US Metro Markets
Rents Rise Across US Metro Markets: A growing nation of cost-burdened involuntary renters
Despite the Delta variant surge, people are returning to life in the city. The pandemic rental deals from last year, though, are gone and show no sign of slowing down as more Millennials enter the market in search of a place of their own.
The housing market rallied shortly after the initial wave of the Covid-19 crisis with inventory and interest rates at historic lows and a growing demand for more space as people worked from home. In the last year, some markets have seen as much as a 25% increase in sale price. The frenzy has now spilled over into the rental market.
Affordable homes are a rarity for almost all buyers with Millennials, first-time owners, people of color and low- to moderate-income families and individuals are especially hard hit. Record low supply, skyrocketing prices, and fierce competition from other buyers and investors are forcing many would-be buyers into rentals. Additionally, many sellers are rejecting deals with FHA financing—an affordable option for many first- time buyers; offers with less than 20% down; and deals with any sort of contingency like an inspection, further compounding the homebuying process for many buyers.
As long as housing remains out of reach, potential buyers become involuntary renters. Landlords and Rental agencies are cashing in on this scenario.
The national average rent in 2021 in multi-family buildings rose 10.3% from a year earlier to $1,539—the first double-digit rise in Yardi data history. And single-family homes for rent have pushed up 13% (Tanzi). By comparison average annual rent increases have grown about 2% in the last decade (Tanzi). Rental prices in 98 of 100 of the top metro markets are outpacing pre-pandemic levels (Adamcyzk).
But wages are not keeping pace with rent prices or home prices for that matter. Many renters are finding themselves cost burdened, meaning that more than 30% of their income is going toward monthly rent. So, not only have housing and necessary living costs like food, utilities and healthcare become a major challenge, but it’s nearly impossible to save for a down payment. The dream of homeownership is further out of reach for many with no end in sight.
Adamczyk, Alicia. “Rent Is about to Go up Again-Here’s Why.” CNBC, CNBC, 18 Aug. 2021, www.cnbc.com/2021/08/18/why-rent-is-about-to-go-up-again.html.
Tanzi, Alex. “Rents Rise in All Big US Cities for First Time since Covid-19 Hit.” The Lima News, Bloomberg News, 11 Sept. 2021, www.limaohio.com/news/business/476436/rents-rise-in-all-big-us-cities-for-first-time-since-covid-19-hit.