Rent prices rising rapidly across the US, experts say
LOS ANGELES - Average rent prices across the U.S. have already begun to return to pre-pandemic levels and are steadily increasing, according to reports from several home-search websites.
According to Dwellsy, a self-described rental housing platform, rents have increased by 9.6% nationwide in 2021 to an average of $1,649 per month.
RENTCafé reported that "renting activity is back to pre-pandemic levels — up 13% in the first half of 2021 compared to the same time last year."
Apartmentlist.com reported that the national median rent has increased by 11.4% so far this year compared with just 3.3% for the first six months of 2017, 2018 and 2019.
"Every one of the nation’s 100 largest metro areas has seen month-over-month rent growth over the last five months," said Christopher Salviati, economist for the website.
Freddie Mac projects U.S. apartment rents will rise 2.5% this year, while the vacancy rate slips to 5%. The forecast is based on the assumption that growth in the economy will continue through the rest of the year and into 2022.
What’s driving the cost increases for rental housing?
A major factor for Americans paying more rent comes from an overall increase in demand for housing, forcing many would-be home buyers to rent due to steep prices.
It’s a boon for owners of big apartment communities more than a year after the economy fell into a recession that left millions of Americans unemployed and struggling to pay rent. Zillow, which tracks housing data, says its rent index rose 7.1% in June, the biggest year-over-year increase going back to 2015.
Figures from Zillow, which tracks a wide swath of rental properties, including those owned by individual investors, show typical rents rose to $1,799 in June.
Rising apartment rents represent a shift from earlier this year, when they weren’t growing and vacancies kept rising. That changed in the spring when pandemic-related restrictions were loosened following a ramped-up distribution of coronavirus vaccines. Since then, an improving economy and job market have helped stoke demand for rental housing.
The national average effective rent, a key industry measure, increased by 0.6% in the second quarter, according to data from Moody’s Analytics REIS, which tracks owners of communities with at least 50 apartments. The April-June increase snapped a string of four straight quarterly declines, lifting the average U.S. effective rent to $1,394.79. It was also the biggest since the third quarter of 2019. Effective rent is what’s left after taking out concessions offered sometimes by landlords to woo tenants.
Meanwhile, one metric that hasn’t improved is the national vacancy rate for apartments. It stayed at 5.3% this year, according to Moody’s Analytics REIS. In 2020, it went from 4.8% in the first quarter to 5.2% in the fourth quarter.
Efforts by federal, state and local authorities to help renters who would otherwise be evicted for missing rent payments have likely helped keep vacancy rates from climbing higher.
A federal moratorium on evictions expired at the end of July, setting the stage for mass evictions at a time when an ultra-contagious mutation of the COVID-19 virus is spreading across the U.S. But in August, the Centers for Disease Control and Prevention issued a new ban on evictions through Oct. 3 in counties with high levels of coronavirus transmissions in hopes of providing relief for some renters.
This story was reported from Los Angeles. The Associated Press contributed.