Rents Surge, Vacancies Fall as Workers Return to Offices

Sign advertising 2BR apartment for rent

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Apartment rents are on the rise and the number of vacancies has dropped as more people head back to work. The trend is especially being driven by the return of young professionals to cities, The Wall Street Journal reports.

Median rents have jumped by more than 10% over the past year, according to Apartment List. Nearly every major metro area is now seeing rents move higher than they were a year ago.

Housing providers are removing incentives such as a month of free rent since they no longer need to use them to attract tenants.

During the early stages of the pandemic, many major markets saw rental prices decline. For example, New York and San Francisco posted double-digit declines in asking rents.

New household formation is driving demand, housing analysts say. “You've had young professionals who were living with parents being called back to their employer or who feel more secure and now they're going to rent,” Amanda Sweitzer, an analyst at Robert W. Baird & Co., told The Wall Street Journal.

Apartment owner UDR Inc. reported it recently reached an all-time-high occupancy rate of 97.5%. Tenants in the age groups of 25 to 29 and 30 to 34 now make up a larger share of their client base than they did before the pandemic.

Some of the uptick in rental demand has been coming from would-be home buyers who have been priced out of the for-sale market. The median existing-home sales price surged 23.4% year over year to a record high of $363,300 in June, according to the National Association of REALTORS®.