Rents have been surging. Since January of this year, the national median rent has climbed by 16.4%, according to the latest National Rent Report from Apartmentlist.com. Rents aren’t slowing down either as demand continues to remain high.
Meanwhile, renters may be missing out on gaining equity. The average homeowner gained about $51,500 in equity over the past year, according to CoreLogic.
Rent payments only cover the cost of shelter and the included amenities. “None of your monthly rent payments come back to you as an investment,” notes a recent article at the Keeping Current Matters blog. “That means, by renting this year, you likely paid more in rent than you did in the previous year, and you also missed out on the potential wealth gain of $51,500 you could have had by owning your own home.”
The higher rent prices are attracting investors, who have been flooding into the market seeing a rising opportunity, particularly single-family rental homes.
“Converging economic trends are driving a surge in single-family rent prices, and consumer confidence has driven an uptick in demand for both renters and buyers,” Molly Boesel, an economist at CoreLogic, recently said in a release. “The ongoing preference toward more living space—and slim for-sale inventory—is forcing would-be buyers back into renting.”
Where Rents Are the Highest
Rents in the 10 largest U.S. tech cities—such as New York City and Austin, Texas—have surpassed their March 2020 levels by an average of 6.3%, according to realtor.com®’s monthly rental report. In most of the largest tech cities, the September rental growth rate is higher than prior to the onset of the pandemic.
The median one-bedroom rent has jumped particularly high in some of the country’s largest cities, according to the apartment rental website Zumper, including in:
- New York: $2,950
- San Francisco: $2,800
- Boston: $2,410
- Washington: $2,210
- San Jose, Calif: $2,200
- Los Angeles: $2,100
- San Diego: $2,100
- Oakland, Calif: $2,000
- Miami: $1,970
- Scottsdale, Ariz.: $1,850