Buying a home right now is tough, but in cities across the U.S., the rental market looks just as grim.
National rental asking prices have been rising for months at a breakneck pace—11% higher than they were in March of last year, according to a new report by the National Association of Realtors.
The NAR surveyed almost 400 large metro areas in the U.S, and while rents have been rising across the country, some cities are seeing rents spike by more than 20%.
These are the 10 largest cities, with more than 1 million residents, that are experiencing the largest year-over-year increases in rent asking prices, according to NAR. The biggest surges are in warmer, southern states that have been posting big population growth since the pandemic.
- Palm Beach, Fla. (26.6%)
- Orland, Fla. (24.4%)
- Tampa, Fla. (23.2%)
- Fort Lauderdale, Fla. (23.1%)
- Las Vegas, Nev. (20.7%)
- Raleigh, N.C. (18.7%)
- Phoenix, Ariz. (18.6%)
- Miami, Fla. (18.4%)
- Austin, Texas (18.4%)
- Nashville, Tenn. (18.3%)
Florida is by far the most well-represented state on the list, and renters in some of Florida’s smaller cities are dealing with rent surges that are even higher. In Fort Myers, whose metro area counts around 770,000 residents, rents have gone up 31.6%, while in Naples, renters are paying 38.1% more than what they were a year ago.
The incredible jump in rental prices means that in some cities, buying a home is actually more affordable than renting right now. How exactly did this happen?
Low supply and high demand
It mainly boils down to the same problem that has been plaguing the homebuying market for months: low supply and high demand.
The NAR report found that in Orlando, where rent surges are some of the largest in the country, there were over 4,800 more homes rented out last year than new rental homes entering the market. Other Floridian cities posted similar increases.
The high costs of buying a home over the past year has also pushed more people to continue renting, which has raised competition and prices.
But the dearth of available rental properties on the market might also be exacerbated by a huge influx of people who have moved to these cities since the start of the pandemic. Hundreds of thousands of people moved to Florida in 2021, contributing to the state’s 1% population growth in 2021. Many of the new arrivals to the state moved into the Southwest part of the state, to cities like Tampa, Fort Myers, and Naples, according to ABC news.
Where will rents go from here?
It is beginning to look like the same factors that have made rents surge this year will be with us for a while.
“The combination of high rent growth and rising inflation is expected to further strain renter households,” the NAR report predicted.
Consumers are also pessimistic about the chances of rent prices falling in the next year. A recent survey by Fannie Mae found that 69% of current renters believe rents will keep increasing over the next 12 months, with the average respondent believing rents will go up 7.1%.
Whether one is looking to buy a home or rent one, it is clear that the U.S. housing market will continue to be a difficult slog for the next few months at least.
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