Median Rent in the 50 Largest U.S. Metros Hit $1,876 in June, a Record High for the 16th Month in a Row
The U.S. rental market is incredibly competitive, but as prices continue to soar, there are signs that its record-breaking price growth could be slowing down, according to a new report from Realtor.com.
The median rent in the 50 largest U.S. metro areas hit $1,876 in June, a record high for the 16th month in a row, the report says. That’s a 14.1% year-over-year increase, which might sound steep, but it’s actually the lowest year-over-year growth so far this year.
Despite the record-high rental prices, it’s still cheaper to rent a home than to buy in 38 of the 50 largest U.S. metro areas, thanks to high home prices and rising mortgage rates, the report says.
“Renters who would be looking to buy are getting priced out of the market,” said Joel Berner, senior economic research analyst at Realtor.com. “The difference between buying and renting is a lot more than it was a year ago.”
The State of the Rental Market
In this competitive rental market, there are often many applicants competing for the same rental, and vacant apartments become filled extremely quickly.
“On a national level, U.S. apartments that became vacant were filled within 35 days on average in the first part of 2022, with 14 renters competing for one apartment to secure a lease,” RentCafe explains.
“More so, 95.5% of rentals were occupied during the same time period, especially as almost two-thirds of renters opted to renew their leases rather than move into a new apartment or become homeowners. And with the number of newly opened apartments accounting for just 0.7% of the total housing supply, finding a new rental is becoming more difficult these days.”
RentCafe ranked the country’s most competitive markets during the first half of the year after analyzing the 100 largest markets in the U.S. where data was available.
The hottest rental market was Miami-Dade County, Florida, where 97.6% of apartments were occupied, rentals were vacant for an average of 27 days, and there were 31 prospective renters competing for each rental.
Florida’s rental market is hot overall, data shows: Three of the top 5 hottest markets were in Florida.
“A large influx of newcomers seeking warm weather and looser restrictions during the pandemic, topped off by a wave of remote workers, has turned Florida into the most sought-after region by renters in 2022,” RentCafe says.
“Specifically, Miami-Dade County is now the hottest rental market in the nation, as the demand for apartments in Southern Florida is stronger than ever, putting apartment seekers in a tight spot to find a new place to call home, due to high occupancy, low supply, and record-high lease renewal rates.”
Rental Prices Are Growing at a Slower Rate
Rental prices have steadily increased since late 2020, but beginning in early 2022, the median rent has increased at a slower rate than before, the Realtor.com report shows.
Year-over-year price growth peaked in January 2022, when the median rent was 17.3% higher than a year earlier. Since then, year-over-year growth has fallen each month, “an indication that the rent eruption of the past two years may be beginning to subside,” the report says.
In the short term, that slowdown might not provide renters with much relief. Rental prices are still 23.9% higher than in June 2020 and 27.6% higher than in June 2019, the report says.
Rental prices are increasing more quickly in some metro areas than in others. Miami, Florida, is at the top of the list with 37.4% year-over-year growth, followed by Orlando, Florida; Providence, Rhode Island; Boston, Massachusetts; and New York City. Rental prices grew the slowest in Minneapolis, Minnesota, at 3.3% year over year.
And renters hoping to buy might be out of luck. In 38 of the 50 largest metro areas in the U.S., the cost of renting is still lower than the cost of buying a starter home, which the report defines as a 0- to 2-bedroom home.
The average monthly cost of a "starter home" across the 50 largest metro areas was $2,437 in June 2022, 29.9% higher than the price of renting, which was $1,876.
Do you know what the rental market is like in your state?
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