Rental prices in the United States have increased by almost 20% March 2020 to 2022 during the pandemic, according to Realtor.com’s Monthly Rentals Report released today. Phoenix rental prices have increased 29% over the past two years, with the median rent reaching $1,896 in March 2022.
Additionally, the two-year rental trends indicate some redistribution of higher rents across the 50 largest markets during COVID, as tenants migrated from expensive big tech cities to relatively more affordable areas. Sun Belt Metros top the list of fastest growing rental markets from March 2020 to 2022, led by Miami, Riverside, California. and Tampa, Florida.while major tech hubs posted many of the lowest two-year rent gains in the country.
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“With asking rents nearly 1.2 times higher than two years ago, our March data highlights the growing rent affordability challenges facing many Americans today,” said said Realtor.com.® Chief Economist Danielle Hale. “At the same time, rental trends in March offer early signs of relief from the torrid pace of rent growth, which has slowed year-over-year for the second month in a row. We expect the cooling will 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 highs, and demand rising as some potential buyers potentially turn to rentals in the face of rising home prices and mortgage rates While the labor market is strong, it is unlikely to see enough revenue growth to keep rents below 30% of monthly wages, especially with inflation and higher day-to-day costs.Yet there is a silver lining to tenants, as rents will not be able to maintain an accelerated pace if incomes cannot keep up.
March 2022 Rental Metrics – National
Rents have increased by almost 20% in two years since the start of the pandemic
The median rental price in the United States hit a new high of $1,807 in March, up 19.3% in just two years, highlighting a roller coaster shift since the start of the pandemic. After a slowdown in 2020 at the onset of COVID, rents have significantly made up for lost ground in 2021 and have since maintained a blistering pace of annual rent growth. In fact, March marked the eighth consecutive month of double-digit annual rent increases (+17.0%), although the pace slowed slightly from February (+17.1%).
Although the underlying reasons have changed during the pandemic, the data suggests that renting remains a popular option for Americans who want flexibility. With the rise of remote working earlier, renting offered an attractive option for those looking to explore life in relatively affordable markets farther from big tech cities. Now that the prices of homes for sale and mortgage rates are rising, many potential buyers are turning to renting and driving up rental prices. In March, rents rose nearly four times faster year-on-year (+17.0%) than in March 2020 (+4.3%).
With increased demand for living space during COVID, rental prices for two-bedroom (+21.9%) and one-bedroom (+17.9%) units have increased at the fastest rates from March 2020 to 2022. Studio rents, which saw the largest rent declines at the start of COVID, posted relatively weaker two-year gains (+12.6%) in March. However, studio rents are quickly making up for lost ground, posting the largest annual rental price increases among unit sizes for the third consecutive month in March.
The pandemic is causing some redistribution of the fastest growing rental markets
Among the 50 largest U.S. metros, COVID rental trends indicate some redistribution from high rents from larger tech cities to relatively more affordable metros outside of major downtown areas. In March, major tech cities did not represent any of the top 10 metropolises in terms of the highest two-year rent growth. Instead, this list was dominated by Sun Belt markets, led by Miami with an increase of 58.0% compared to March 2020 (see table below).
Additionally, major tech cities accounted for five of the 10 slowest growing rental markets from March 2020 to 2022. Despite these setbacks, many major tech hubs continue to generate some of the highest rents in the country. Even San Josewhere rents have remained largely unchanged since March 2020 levels (+0.1%), claimed the highest median rent in the country ($3,075). Still, March rental data signals some final opportunities for renters to save money in major metros like San Franciscowhere rents for studios (-13.0%) and two-room apartments (-3.3%) fell March 2020.
“With jobs booming and the growing wave of back-to-office fueling demand, big rents are back in big tech cities. Still, our March data suggests select tech hubs like San Francisco could still offer great deals on studios compared to pre-COVID rents. And for some, like Gen Zers who are going it alone, even small rental savings could make a big difference,” said George RatiuRealtor.com® Senior Economist and Head of Economic Research. “No matter what your life stage, with rising prices taking a larger share 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 Realtor.com® The rental app can help you personalize your search and receive alerts on newly listed rentals within your budget. »
March 2022 Rental Metrics – Top Markets by Highest and Lowest Rent Gains March 2020