Rents hit all-time high as increases accelerate into summer
Rents hit records across the country as the burden of the pandemic subsides, according to two separate reports.
The national median rent rose 5.5% to $ 1,527 in May, the highest on Realtor.com records and the fastest growth rate since March 2020, before the pandemic began. At the same time, according to CoreLogic, rents for single-family homes rose by 5.3% in April compared to the previous year, marking the largest annual increase in almost 15 years.
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"The biggest rent increases weren't necessarily in the biggest cities," Realtor.com chief economist Danielle Hale told Yahoo Money. "They were in secondary, cheaper markets."
According to the Realtor.com report, mid-sized cities saw a significant increase in May. But rents in the country's largest cities, especially the tech hubs, have fallen over the past month - albeit more slowly than before - and there is still a way to recover.
"Rents in large markets are still falling year on year," Hale said, but those falls are "getting smaller and smaller." In the meantime, "rents are increasing month by month so they are making progress."
A "For Rent" sign on the outside of an apartment building on June 2, 2021 in San Francisco, California. (Photo by Justin Sullivan / Getty Images)
Rents rose above pre-pandemic levels in 38 of the 50 largest markets, averaging 9.1% year-over-year, driven by emerging tech hubs and suburbs outside the big cities.
For example, Riverside, California; Memphis; Tampa, Florida; Phoenix; and Sacramento, Calif., grew more than 15% year over year in May.
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"Affordability is really important, especially in a rising price environment," said Hale. "People don't want to be too far from job centers, but they are still looking for relatively more space and need their housing allowances to expand further."
For single-family homes, the largest annual rent increases were in Phoenix (12.2%), Tucson, Arizona (10.6%), Las Vegas (9.3%), and Atlanta (9.1%), according to CoreLogic.
According to Realtor.com, one- and two-bedroom rents also hit new highs.
Since home office arrangements continued to exist for many employees, the demand for larger spaces only increased. One-bedroom rents rose 5.8% year over year to $ 1,422, while two-bedroom rents rose 8% to $ 1,718. Both were the highest values since March 2019.
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The median rent for studios also rose by 1%, the first increase in 10 months.
"People have spent a lot of time at home realizing that if they work from home they could have more space to do more things, have that separation," said Hale. "It will be interesting to see how long this trend continues as companies open up and bring employees into the office."
(Photo credit: Realtor.com)
Rental declines slowed in the country's top 10 tech hubs, falling only 2.3%, better than the 6.6% decline earlier this year.
And major cities hardest hit by the pandemic saw rents that stayed at or below pre-COVID levels. For example, rents fell 8.3% in San Francisco and 7.3% in San Jose, while staying flat in New York. In these markets, rents would have to rise by a further 9 to 12% in order to return to peak prices.
"Rents vary depending on the local market," said Hale. “It really shows how the pandemic economy, disruption and recovery played out very strongly depending on the industry and location. There are many different ways. "
The Yahoo Money sister site Cashay has a weekly newsletter.
Janna is an editor for Yahoo Money and Cashay. Follow her on Twitter @JannaHerron.
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