Things are heating up in the Sun Belt, from Phoenix to Miami—and it’s not just the temperature.
Rents are increasing across the country at a breakneck pace, making it more difficult for renters to find affordable housing. February was the seventh straight month where rent price increases were in the double digits—costing renters nationally an average 17.1% more than what they paid last year, according to a recent Realtor.com® report.
(The report is based on studio, one-bedroom, or two-bedroom apartments, condos, townhomes, and single-family homes listed for rent on Realtor.com in February. Only the 50 largest metropolitan areas were included. (A metropolitan area includes the main city and surrounding towns, suburbs, and smaller urban areas.)
“A lot of it is catch-up from rents not growing as they typically would during the [COVID-19] pandemic,” says Danielle Hale, chief economist for Realtor.com. “With broad inflation trends everywhere, landlords are trying to make up for higher costs in property taxes, utility, upkeep, and maintenance and trying to pass those on to renters to maintain their position.”
There are also more renters looking for housing—981,000 more at the end of the fourth quarter of 2021—creating extremely low vacancy rates of 5.8%, the lowest since the mid-1980s, according to a recent report from the Joint Center for Housing Studies of Harvard University. And as would-be homebuyers are struggling to find homes to buy or are being priced out of the market, they’re remaining renters longer, adding to the competition.
Two-bedroom units are seeing the largest increase in rents over last year, with the median rent at $2,002 nationally, up $278—or 16.2%—over the same time last year, and up $350—or 21.2%— compared with two years ago.
The median rent for a one-bedroom is now $1,648, a 16.4% increase over last year and 17.1% higher since February 2020. Meanwhile, the median rent for a studio apartment is now $1,474, up 17.1% over last year and 11.7% higher than it was two years ago.
All three have reached record highs, according to Realtor.com data history.
As bad as these increases sound, it’s much, much worse in warmer-climate cities. In Miami, rents jumped 55% since February of last year.
Other Florida metros such as Orlando, Tampa, and Jacksonville are not far behind with rent jumps. Austin, TX; San Diego; Las Vegas; Phoenix; San Antonio, TX; and Memphis, TN, rounded out the top 10 metros seeing the highest rent increases.
Chris Morenza with Florida One Realty in Miami says she has never seen rental prices increase so dramatically as they have in the past year, with some units renting above the listing price—and going fast.
One unit listed at $2,150 was rented at $2,400. Another tenant paying $2,000 decided not to renew, and Morenza later rented out that unit for $3,000.
“In another case, we put a rental [online] late at night. An agent showed the unit at 8 a.m., and we had a lease done by midday,” says Morenza.
Other factors adding to Miami’s rising rents is its distinction as an international city, says Hale.
As the world opens back up and people feel more comfortable traveling, they may be seeking to relocate somewhere with low taxes where they don’t have to worry about snow. That, along with a high concentration of retirees and international renters, who might be paying for their units with wealth rather than income, is another factor.
Miami is also a hot market for real estate investors, according to a recent investor report, and it has seen its population increase, along with other Sun Belt destinations.
“When people are able to work remotely, and are no longer tied to being in New York, they’d rather be down here,” says Morenza.