US home rental prices hit highest level in 2 years
Realtor.com said the uptick bolsters the notion that 'rents have fully recovered' in most big cities
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Home rental prices, which dropped in many U.S. cities throughout the coronavirus pandemic, have reached their highest level in about two years.
As of May 2021, the median national rent reached $1,527, up 5.5%, compared to a year ago, according to Realtor.com. The median rent in May increased in 43 of the 50 largest metro areas, compared to the same period a year ago. This is a slight increase from 40 metro areas in April and 33 in March. Meanwhile, rental prices are up 7.5% nationwide over the past two years.
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According to Realtor.com analysts, the uptick in price bolsters the notion that "rents have fully recovered in many of the nation’s largest cities and are on track to speedy recovery in many others" — pushing those highly sought after coronavirus discounts further out of reach.
There is a multitude of factors contributing to this increase including rising home costs, which are ultimately forcing more buyers to "opt for renting," according to Realtor.com economic research analysts Nicolas Bedo and Danielle Hale.
Furthermore, "increasing vaccination rates may be boosting confidence in the safety of moving, which drives up demand, and prices," according to Bedo and Hale.
A man talking by phone nearby the window in the empty living room filled with cardboard boxes in the recently rented apartment. (iStock)
The area facing the fastest price increase is Riverside, California, where the median rent reached $2,020 in May, up 19.2% compared to a year ago.
Memphis, Tennessee; Tampa, Florida; Phoenix, Arizona; and Sacramento, California, also topped the list for the fastest growing metro areas. Each of the areas saw rents growing by 15% or more year over year.
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The data indicated that renters are losing out on the chance to score a discount on rent.
In May, Realtor.com reported that "rents in urban tech centers had started rounding the corner away from the steep declines seen for the past year, and onto a road to recovery." The real estate website's latest report not only "confirms this trend in tech hubs," but also "shows an accelerating pace back toward pre-COVID growth rates."
"Those tech city declines are about to be erased, and anyone who was hoping to score a discounted rate in places like San Francisco, San Jose, or other major tech centers, will soon find those deals gone," Hale and Bedo said.
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Rent growth in tech cities hit its lowest point in February 2020. However, by May 2021, the median rent in major tech areas reached $2,150, essentially its "highest position in nine months."
"This upward trend suggests a willingness to return to big cities, and perhaps signals the return of workers to these areas," according to Bedo and Hale.