(NEXSTAR) – If you feel like you’ve been pushed out of the housing market, you may not have better luck in the rental market. Rent prices have been rising throughout the pandemic, and it doesn’t look like that will change any time soon.
In a recent analysis, Realtor.com found that the median rent for homes with two bedrooms or less increased by more than 19% from December 2020 to December 2021 in the 50 largest metropolitan areas in the United States. Rising rents have not had the same impact on all states in the United States. Rent.com recently discovered that some states have seen rental rates increase by more than 50% between 2020 and 2021.
But what makes the rent go up? Jon Leckie, data reporter at Rent.com, said there could be two contributing factors: migration and a booming home buying market.
“When the pandemic hit, a lot of people left the big cities, which drove up prices in suburbs and suburbs. But as rents fell in central metros, people came back, including those who don’t couldn’t previously afford to live in central subways,” Leckie told Nexstar.
This has caused demand and prices to rise to levels “at or above what we saw before the pandemic”. The impact of the pandemic on housing prices has also pushed up rental prices. As potential first-time home buyers have found themselves out of the market and stuck in rental properties, Leckie says demand for rentals has increased further.
Looking at rental price trends in the United States, Leckie found cities like Long Beach, California; Austin; and New York saw some of the largest year-over-year increases in average rent prices. He said he believed people tended to seek out cities with a growing economy and jobs, as well as cultural amenities.
Going forward, cities that can offer each of these elements will likely experience rising rents.
“It’s for both large metros and small markets that meet those criteria,” Leckie explained. “The ones that will shrink are cities that may have had a pandemic boom due to their natural amenities, but lack the infrastructure to support job creation and economic growth.”
Do you want to move and avoid a rent increase? You might want to skip the secondary markets and try the Midwest.
“We’ve seen a lot of increases in areas around Phoenix and other areas around Los Angeles, also in Orlando, Florida, and Portland, Oregon,” Leckie said. “We are seeing decreases in many Rust Belt cities like Toledo, Ohio; Indianapolis; and Pittsburgh, and in select Midwest markets like Kansas City, Missouri, and Lincoln, Nebraska.
While Leckie predicted rental prices will continue to rise through 2022, the rate of growth will likely be slower. The year-over-year percentage change seems so high due to lower rental prices through 2020.
Rent growth is expected to reach around 7.1% in 2022, slightly lower than what we saw in 2021, according to analysis from Realtor.com.
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