According to a report from Realtor.com, the national median rent was $1,827 per month in April, up 16.7% from a year ago. Rents have risen steadily since the beginning of last year. If recent trends continue, the report expects the average rent in August could exceed $2,000 per month.
The continued rise in rents is caused by a mismatch between rental supply and rising demand, largely from would-be home buyers, said Danielle Hale, chief economist at Realtor.com. Beaten by the high cost of buying a home, some potential homeowners choose to continue renting instead.
“Renters have few options except to meet higher rents and, in some cases, even make a higher offer [the landlord’s] asking price — whether they can afford it or not,” she said.
There are some signs that the pace of rent increases is starting to slow. April is the third consecutive month in which annual rental growth has slowed from its peak in January. But while annual price growth slowed slightly from March – when rents rose 17% year-on-year – last month’s increase was significant.
And some cities saw rent increases that were even more impressive. Miami saw its fastest growth in April, with a median rent of 52% to $2,800. That’s $950 more than a year ago.
Other cities in the Sun Belt also saw strong year-over-year growth, including Orlando and Tampa, Florida; San Diego and Las Vegas.
Pittsburgh, Detroit and Minneapolis saw the smallest annual rental growth in April, all with rents increasing 5.5% or less annually.
“Rents are not only maximizing tenants’ housing budgets, but are also the greatest strain on their overall finances, even as inflation drives up costs across the board,” Hale says.
Rents for studio apartments, which are often the most affordable housing option, continued to grow faster than larger units. This reverses last year’s pattern, especially in the largest metropolitan areas such as New York City, where studio rents have risen 29% since last year; Los Angeles, where they are up 23%; and Chicago, up 22%. While studios were quickly vacated early in the pandemic, there is now more demand for those looking to move to a place they can only afford or return to major city centers.
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