Understanding Rising Rents: What Renters Need to Know

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Rental prices, along with everything else, continue to climb in 2022. In the early days of the pandemic, a record number of renters left major cities for more wide-open spaces, to purchase single-family homes or to move in with family or friends due to economic uncertainty. Rental housing was left vacant, and rent prices went down.

In the past year, Americans faced a hyper-competitive real estate market. With housing prices high and housing supply low, the demand for rental units rose – and the average rent continues to rise along with it. What does this mean if you're on the hunt for a rental property?

How Much Have Rent Prices Risen?

According to Apartment List's National Rent Report, rent growth escalated by ​17.8 percent​ in 2021. That is a national average; how steep a rent increase you'll encounter depends on where you live.

If you look at Apartment List's individual reports for major cities in the U.S., you start to see a more detailed picture. For instance, between February 2021 and February 2022, rental prices spiked from ​24 to 33.5 percent​ in cities like New York, Austin and Miami. During that time, rents climbed a more modest ​2.6 to 6 percent​ in Detroit, Minneapolis and Cleveland.

According to Zillow, an average rent increase before 2019 was typically about ​2 percent​. Last year's hike kicked the idea of homeownership further down the road for many renters by making it even more difficult to save for a down payment on a new home.

The skyrocketing home prices of today's housing market are forcing future first-time property owners, many of them millennials, to ride out high rent prices for another lease term.

In September 2021, the Biden Administration announced the Build Back Better Agenda, including a commitment to increasing the supply of quality, affordable rental units and making single-family homes accessible to homebuyers rather than investors.

Rent Hikes, Inflation and Housing Insecurity

This rent hike is on top of nationwide inflation, which hit ​7.5 percent​ in the first month of 2022. It doesn't take an economist to figure out that soaring housing costs, rising interest rates and climbing costs of food, energy and transportation are going to force some renters out of their homes.

But plenty of economists are talking about it – and Mark Zandi, the chief economist at Moody's Analytics, says housing inflation is likely to stay with us throughout 2022. For those who are already battling housing insecurity, this is unwelcome news.

Low-income renters are at the highest risk of losing their homes. According to data collected by the U.S. Census Bureau, at the end of 2021, after the eviction moratorium ended, there were still ​10 million households​ behind on rent.

Data supplied by the White House indicates that in 2019, ​11 million​ families spent over ​50 percent​ of their income on rent. The U.S. Department of Housing recommends that no more than 30 percent of income be spent on housing. If rent prices were gouging low-income renters before the pandemic, the current cost of rent might be devastating to many.

Rental Prices in Major Cities

Here is how much you'll pay for a one-bedroom apartment in some major cities, according to median rents recorded by Apartment List and Redfin:

• New York City: $2,014
• Austin: $1,491
• Miami: $1,581
• Boston: $2,007
• Phoenix: $1,217
• Washington, D.C.: $1,774
• San Francisco: $2,317

In those same cities, median rents for a two-bedroom apartment ranged anywhere from 6 percent to 28 percent above the cost of a one-bedroom.

Affordable housing is increasingly difficult to find in higher-rent states like California, New York and Texas, while smaller, midwestern towns and suburbs have greater affordability and better rental markets. Apartment Guide recently published a list of 100 towns with available rental properties under $900 a month.

What's a Renter to Do?

In September 2021, the Biden Administration announced the Build Back Better Agenda, including a commitment to increasing the supply of quality, affordable rental units and making single-family homes accessible to homebuyers rather than investors.

These actions aim to help the landscape for renters and homeowners. As with all policies, these initiatives will take time.

If you live with family or friends, 2022 may be a good year to save for a down payment and wait to see what happens with rental prices, home prices and mortgage rates.

But if you need to find an affordable rental property this year or are trying to stay in your existing rental unit, keep tight to your budget and check into a program in your state or town that may have funds to help you manage rent and utilities. If it's possible, extend your search outside of major cities, where you'll find greater affordability.