Rapidly rising inflation, the COVID-19 pandemic, and the continuing housing shortage have all contributed to record rent hikes nationwide.
November marked the fifth straight month of double-digit rent increases with rents rising 19.7% year over year in the 50 largest metropolitan areas in November, according to a recent Realtor.com® report. The national median rent hit $1,771 a month in November—the highest ever recorded by Realtor.com.
That means renters are shelling out an additional $291 a month compared with the same time a year ago.
Realtor.com calculated national rents by averaging the medians of the 50 largest metropolitan areas as of November 2021. Rental units include apartment communities and private rentals (condos, townhomes, single-family homes). All units were studio, one-bedroom, or two-bedroom.
“We are seeing a lot of eviction moratoriums expire this year, which has allowed many landlords to adjust their rates,” says George Ratiu, manager of economic research at Realtor.com.
Another factor was a surge in millennials seeking homes to rent or buy. Since it’s so tough to purchase a home due to the housing shortage, many would-be buyers are being forced to rent. There aren’t enough rentals available either, pushing prices up.
“People are entering their 30s in record-high numbers, 4.8 million just this year,” says Ratiu. “So there is tremendous demand meeting insufficient supply [of housing].”
The national housing shortage exists largely due to a drop in new home construction from 2011 to 2021, he adds, a result of the Great Recession, the economic downturn that lasted from 2007 to 2009. That pause in homebuilding while the population was increasing is a big reason there aren’t enough homes to go around.
Rents increased the most in Miami; Tampa, FL; Orlando, FL; Riverside, CA; San Diego; Memphis, TN; and Austin, TX—all growing by more than 30% since last November. They were up 44.4% in Miami in November compared with a year earlier.
The cities showing the greatest rent hikes have strong local economies, good bang for the buck, and balmy climates.
“Good weather was particularly desirable during the pandemic when you had to be socially distancing and there was the need to be outdoors,” says Ratiu.
It’s also a lure that Florida has no state income tax.
“If you are able to work from home, why not move somewhere winter is two weeks long?” says Giovanna Calimano, a Realtor® with Luxe Properties in Miami.
Due to demand, most Miami properties are renting for a premium, says Calimano.
“If it’s a nice house, in a nice area, it gets 20 offers,” she says.“One two-bedroom, advertised at $2,100, ended up renting for $2,300.”
Some of her rental clients, unable to find affordable apartments, were forced to extend their existing leases. A few moved out state after months of searching for a rental, while some landed in efficiency apartments or temporarily moved in with family.
Some individuals even write a letter to the landlord, pleading their case.
“There is inventory, but it goes quickly,” says Leonardo Castells, a Realtor at NXT LVL Realty in Miami. “One tenant decided to offer six months’ rent upfront and finally got a positive answer.”
Minimum-wage workers are most hurt by rent hikes. Despite an increase in the minimum wage, hourly workers must work harder and longer to afford a typical rental unit in the 10 metros with the biggest rent surges, according to the Realtor.com report.
What lies ahead for renters in 2022? Those who have the flexibility to work in the office one day a week or less frequently will think beyond the typical commute, he says. For example, some workers in New York City have moved as far upstate as Albany.
“This is not an option for service workers who have to be onsite,” adds Ratiu. “For them, next year will be one of continued challenges.”
He predicts rents in 2022 will rise nationally, to about 7.1% more than this year.
“Rising mortgage rates will make buying a home challenging for first-time buyers, who will continue to rent,” he says. “The only way to solve the problem is by more construction.”
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