Rent prices up more than 10% on average year-over-year in Q3: study
The biggest spikes are happening in smaller cities
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The price of rent rose on average more than 10% nationwide in the third quarter compared to the same time last year with significant spikes seen in many smaller cities, according to a recent analysis from Rent.com.
Monthly rent for a one-bedroom apartment in the U.S. on average was up 10.59%, to $1,690, the study found, and two-bedroom units went up 11.88%, to $2,050.
A "for rent" sign posted in front of an apartment building on June 02, 2021, in San Francisco, California. After San Francisco rental prices plummeted during the pandemic shutdown, prices have surged back to pre-pandemic levels. (Photo by Justin Sull … (Photo by Justin Sullivan/Getty Images / Getty Images)
A rise in rental prices from 2020 is not entirely a shock given that the prices plummeted in many areas during the onset of the COVID-19 pandemic due to vacancies, but Rent.com's data shows significant jumps in some areas with drops in others for Q3.
The study found that all but ten states had seen a rise in rates for one-bedroom apartments, with the highest spikes seen in Idaho at 56.96% to $1,614, Louisiana at 22.93% to $1,054, and Oklahoma at 22.87% to $965.
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Of the states that saw drops in rent for one-bedroom units, South Dakota rent prices had the greatest average decline at 26.27% to $690, followed by New Mexico at 14.35% to $983 and Kentucky at 14.30% to $938.
A man enters a building with rental apartments available on August 19, 2020, in New York City. (Photo by Eduardo MunozAlvarez/VIEWpress via Getty Images) (Photo by Eduardo MunozAlvarez/VIEWpress via Getty Images / Getty Images)
Small and mid-sized cities experienced major jumps in pricing.
"While rent prices increased in many cities across the country from Q3 2020 to Q3 2021, the rate of increase appeared steeper in medium and small-sized cities compared to larger cities," Rent.com managing editor Brian Carberry told FOX Business.
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"When looking at cities with a population above 250,000, only one city had a rate increase over 100% (Arlington, TX for two-bedroom apartments)," Carberry explained. "But when we look at medium and smaller cities, we see a triple-digit increase in 9 places: Maple Grove, MN (both one- and two-bedroom apartments); Smyrna, GA; Port Arthur, TX (both one- and two-bedroom apartments); Tallahassee, FL (both one- and two-bedroom apartments); Meridian, ID and Boulder, CO."
Carberry says that to him, that "suggests more demand in these medium to smaller cities due to limited inventory."
Ben Jarso, an avid skier, recently bought a home in Truckee, CA, and says he loves it. He moved up from the Bay Area, since virtual working is common at Facebook, where he works. Housing prices and construction in Truckee, California is on the rise … (Carolyn Cole / Los Angeles Times via Getty Images / Getty Images)
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Another factor could be at play as to where rent prices tend to rise and fall, according to Carberry.
"The ability to work from home has allowed renters to live in places all across the country, not just where their offices are located," he noted. "This has increased the popularity of secondary or satellite cities that are still close to major metro areas, but may come with a more affordable price tag for rent."