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Rental Prices Continue To Skyrocket, Squeezing Renters Across the Country
High demand for a limited supply of rental housing has resulted in skyrocketing prices across the nation—and desperation from those seeking more affordable housing options.
The median rental price hit a new high of $1,575 in June, up 8.1% compared with last year, according to a recent report from Realtor.com®. Forty-four of the 50 largest housing markets posted new highs, squeezing renters even tighter. (The report looked only at the 50 largest metropolitan areas.)
“We are seeing an excessive amount of people showing up for rental properties and turning applications in, probably five times the amount it was a year ago,” says LaVern Slusher Sr., a real estate broker in Riverside, CA.
The Riverside metropolitan area, which includes the city about 50 miles east of Los Angeles and some surrounding towns, saw the largest rent increases in the nation in June. Rents shot up 24.2% year over year and 4.6% from May, to a median of $2,112.
One recent rental drew 235 inquiries in just three days, says Slusher. A higher-priced one received 200 inquiries over a week.
Similar to the shortage of homes for sale, the number of homes available to rent is historically low, driving prices up. That’s hurting cash-strapped renters vying for places to live that fit in their budgets.
But rents were still down year over year in some of the nation’s priciest cities, which many renters who could work remotely left during the worst of COVID-19. Those include the tech powerhouses of San Francisco and San Jose in California, New York City, and Boston.
The pandemic’s economic pressures “have not affected everyone equally,” says Danielle Hale, chief economist at Realtor.com. “There has been a lot of government support, so incomes remained steady for a lot of people, and for some Americans, incomes have risen.”
Small cities are seeing large rental price increases
Many of the places seeing the largest growth are smaller cities farther from the coasts. These more affordable areas near larger urban areas became more attractive to remote workers seeking more space during the pandemic, says Hale.
For example, Riverside is about an hour from much pricier Los Angeles, depending on traffic. Sacramento, which came in fifth in the nation for price growth, is 90 minutes from San Francisco.
“As companies call workers back, it will be interesting to see if these areas hold on to those [price] gains,” she says.
Slusher thinks another factor in shrinking rental inventory is landlords “throwing in the towel” as restrictions like the eviction moratorium make it harder to manage properties and pay their own bills. He has “seen a number of landlords sell their property and move out of state,” or just take property off the rental market.
A lot of protections “are still in place but are close to expiring,” Hale says. Renters who are ultimately evicted will need to find new housing going forward, making it harder for tenants to secure housing. It’s “a bit of a wild card for the market going forward.”
Rental markets with the largest year-over-year price increases and median rents in June 2021