Rents are continuing to rise across the US.
The cost of rent, on average, was 10.1% higher in 2021 than in 2020, growing five times faster last year than it did in the first year of the pandemic, according to Realtor.com’s Monthly Rental Report.
By December, national rents had the sixth-straight month of double-digit annual increases. The national median rent for a one-bedroom in December was $1,651, up 19.3% over the year before.
But many large cities saw rents surge even higher, led by Miami with median rent of $2,850 in December, up a whopping 49.8% from last year. Miami was followed by Tampa, Florida, and Orlando, which both had annual rent growth of 34% or more.
“With rents already at a high and expected to keep going up, rental affordability will increasingly challenge many Americans in 2022,” said Danielle Hale, Realtor.com’s chief economist.
Rents tumbled during the beginning of the pandemic in 2020, but they flattened out in early 2021 and gained momentum throughout the year. Rents hit a double-digit yearly pace by summer and continued to rise through the second half of 2021, according to the report.
Second-tier cities shine
The resurgence in rental prices was partly driven by big city renters moving to smaller rental markets where their money went farther, the report said.
This surge in popularity in second-tier rental markets helped to offset slower growth earlier in the year, according to the report.
The city with the fastest rent growth in 2021 was Riverside, California, outside of Los Angeles, which saw rents increase by 28.5% from the year before.
Other top gainers for the year were Tampa, up 25.6%, Memphis, up 23%, Miami, up 22.1%, and Sacramento, up 19.5%.
Meanwhile, big tech cities were among the slowest-growing rental markets in 2021. San Francisco, where rents were down 2.5% from 2020, and San Jose, with rents down 0.3%, topped that list.
Other major cities that recovered in 2021, but still experienced some of the slowest rent price growth were Chicago, Boston, New York, Minneapolis, Washington DC, Milwaukee, Wisconsin, Philadelphia and Seattle.
Affordability challenges remain
Month-over-month, the rent increases did cool slightly in December. But that is not expected to last.
“Regardless of where you live, renting is generally more expensive now than in prior years,” said Hale.
But workplace flexibility and income growth could give some renters more negotiating power.
“Those able to work big city jobs while living in secondary metros are still likely to find more affordable rental options than in the biggest tech cities,” said Hale.
Tampa, for example, is one of the fastest growing rental markets of last year. But with a median rental price of $2,038 in December, it is still more affordable than a city like New York, where the median rent was $2,670.
And some renters may want to hop off the rising rent train altogether.
“For those thinking about making the transition from renting to buying their first home, rising rents will remain a motivating factor even as for-sale home prices and mortgage rates continue to climb,” said Hale.