Rental prices are rising fast and, as leases come up for renewal, tenants may be shocked by just how much. A new report from realtor.com® shows that rental prices rose by nearly 20% from March 2020 to 2022.
Sun Belt metros topped the list of fastest-growing rental markets over the past two years, led by Miami, Riverside, Calif., and Tampa, Fla. On the other hand, major tech hubs that have in the past served as rental leaders lately have seen many of the nation’s smallest two-year rent gains, according to the report.
Asking rents are nearly 1.2 times higher than two years ago, says Danielle Hale, realtor.com®’s chief economist. That likely will lead to rising rental affordability challenges for more households. The U.S. median rental price reached a record high of $1,807 in March.
However, March rental trends do show early signs that the pace of rent growth may be cooling, Hale adds. For the second consecutive month, rent growth has moderated when compared year over year.
“We expect cooling to continue over time, but the jury is still out on whether rent growth will hit single digits by the end of 2022,” she notes. “This is largely due to the mismatch between rental supply, with vacancy rates at record lows, and demand rising as some would-be buyers potentially turn to renting in the face of higher home prices and mortgage rates.”
Hale notes it is unlikely to see enough income growth to keep rents under 30% of monthly paychecks, especially given higher inflation.