Rents have officially reached their highest point in two years. And in 44 of the biggest 55 U.S. housing markets? They’re now the most expensive rents on record.
According to a new report from Realtor.com, the national median rent for June sat at $1,575, a whopping 8.1% increase over June 2020 and a 10.4% jump compared to the year prior. On a monthly basis, national rents were up 3.2% over May.
"Beyond simply recovering to pre-pandemic levels, rents across the country are surging," said Nicolas Bedo, an economic data analyst for Realtor.com. "Typically, rents fluctuate less than 1% from month to month."
So what’s behind this new surge in rents, and what properties are seeing the biggest jumps? Let’s take a look.
Why are rents rising?
Increasing rents are the result of quite a few factors. First, buying a house is more difficult than ever. Prices are rising, inventory is incredibly low, and competition is stiff. This has pushed many potential homebuyers to the sidelines -- and toward rental properties instead.
There’s also an influx of a new, wealthier breed of renters hitting the market. This stems from increasing work-from-home opportunities and more geographic flexibility coming out of the pandemic.
Finally, increased confidence also has something to do with it. As Bedo put it, "Increasing vaccination rates may be boosting confidence in the safety of moving, which drives up demand and prices. And while rental vacancy rates -- the number of apartments and homes for rent that are currently unoccupied -- are slightly higher this year compared to last, they remain lower than we’ve seen historically."
Where rents are increasing most
Rents are rising across the board, but they’ve jumped the most on two-bedroom properties, which saw rents increase 10.2% over the year. Median rents now clock in at $1,770 on these units -- the highest point on Realtor.com’s record.
One-bedrooms saw 8% growth, with median rents now at $1,466, while studio units experienced the smallest bump, at 4%. That latter isn’t too surprising given the exodus seen in big cities (where studios are common) and the desire for more space seen during the pandemic.
"Studio units saw rent declines throughout the pandemic as they tend to be more common in high-density cities and high-density buildings that made distancing and extra time at home more challenging," Bedo said.
At the market level, rents increased most along in cities in the South and West. Top cities for rent growth included:
- Riverside, California (24.2% increase)
- Memphis, Tennessee (23%)
- Tampa, Florida (21.1%)
- Phoenix (20.9%)
- Sacramento, California (17.5%)
- Cincinnati (17.1%)
- San Diego (17%)
- Las Vegas (16%)
- Atlanta (15.6%)
- Jacksonville, Florida (14.4%)
Rents only declined in three major cities: Boston, New York, and San Jose, California.
The bottom line
With rents on the rise and the eviction moratorium set to expire in just days, things are looking up for landlords and multifamily investors. If you’re considering a new rental property investment, be sure to check out our market-level analyses. They can help guide you toward smart investments in your area.