The rental market appears poised to turn the corner and demand for rental units is expected to surge in 2022. The rise in rental prices has slowed compared to the previous year, but it is still on an increasing track. While rising rents is a good sign for turnkey rental property owners, it will certainly put millions of renters hit hard by pandemic-related income loss in an even more difficult position. Mortgage applications have decreased compared to the previous year as interest rates continue to rise.
Renters are disappointed. According to Realtor.com® data, the average wages for the first quarter of 2022 climbed by just 5.2% from the previous year, thus the cost of housing surpassed earnings almost three times over, just as the general cost of living grew by 8.6% in May. Paychecks aren't keeping up with rent, commodities, and services costs for renters. However, the fourth quarter of 2021 and the first quarter of 2022 saw a strong rent rise. If rent growth stays at 17%, the national median rent will exceed $2,000 this summer.
This housing market slowdown should offer current renters a chance to consider their next steps in the home-buying process. Rising mortgage rates in 2022 may discourage first-time buyers, causing them to remain renters for longer. Even though we're in the midst of the busiest time of year for the rental market, rising rents may be causing many renters to extend their current leases rather than seek new ones. These factors may be contributing to the fact that vacancy rates are still much below pre-pandemic levels.
During the rental market's busy season, the summer months are anticipated to bring more increases in rent. Despite a recent cool-down, many American renters are likely to remain burdened throughout 2022 by historically high housing costs. Below you'll find various rent reports that highlight year-over-year rent trends and price fluctuations that renters may be experiencing in various parts of the United States. We highlight a few takeaways from multiple sources having an impact on the overall rental market.
Latest Rent Prices Trends 2022
Let's examine the current state of rental prices in the United States from the best sources.
During “normal” years, July is the busiest moving season, when national rent rates often reach their apex. However, Zumper's National Rent Report shows their index is up just 0.5 percent for one-bedroom apartments and down a staggering 2.9 percent for two-bedroom apartments — a warning that rent increases are beginning to stall and a reminder that the pandemic has disrupted practically every economic trend in its path.
As the housing market begins to decline, price reductions and longer durations on the market ensue. Most markets no longer get dozens of expensive bids within hours of a home's listing. The ensuing price reductions have provided pockets of opportunity for tenants who have been searching for a home for years, and are likely the cause of this month's substantial decline in two-bedroom rent pricing.
San Jose is now the third most expensive city in the United States for median one-bedroom rent, after only New York City and San Francisco (it was fifth last month). With large computer industry companies gradually bringing staff back to the office, it stands to reason that returning workers are contributing to price inflation.
After a significant surge from tenth in March 2020 to third in April of this year, Miami dropped two positions to become the fifth most expensive. The median one-bedroom rent in Miami has decreased 5.9 percent from last month to $2,400. Other Florida towns also had drops in the typical one-bedroom rent: Tallahassee is down 6.5% from last month, Fort Lauderdale is down 5.8%, and Tampa is down 1.2%.
There are no indications that New York City will surrender its distinction as the most expensive city. Its typical one-bedroom rent of $3,600 is up 40.1% from the same period last year and a full $600 more than San Francisco, the second most costly city. The typical rent for a two-bedroom apartment in New York City is currently $3,950, signifying a year-over-year rise of 44.7 percent and a month-over-month increase of 5.9 percent.
Rental Price Trends to Keep an Eye On
- Zumper’s National Index signals a long-awaited slowdown in the shocking price hikes over the last year. Median one-bedroom rent is up 0.5 percent over last month–yet another all-time high, but also a much more reasonable growth rate than the one to two percentage point increases that became the norm during the height of the pandemic.
- Meanwhile, two-bedroom rent is down a significant 2.9 percent over last month–a signal that some consumers who’d put off buying a home are finally making the jump as housing prices begin to level off.
- Miami’s red-hot market is beginning to cool; that city fell two spots this month and is now the fifth most expensive metro in the United States. San Jose has taken Miami’s place as the country’s third most expensive market.
- New York City’s median one-bedroom rent of $3,600 is an increase of 40 percent over the same time last year and $600 higher than San Francisco, the second most expensive city in the country.
The national average rent price trends from Rent.com show that one-bedroom and two-bedroom rental prices decreased somewhat month-over-month across the nation. However, year-over-year rent fluctuations are still substantial, with 95 percent of apartments experiencing rent increases. From Tacoma to New Jersey and Miami, the coastlines continue to set the standard for high rents.
Rents throughout the nation have maintained their dramatic year-over-year increase. Both bedroom kinds continue to increase by double digits year-over-year, with one-bedrooms increasing by 25.5% and two-bedrooms increasing by 26.8%. Prices for both apartments have reduced modestly month-over-month, providing renters with much-needed respite. assess the present rental market situation.
| Unit Type | Average Rent | MoM % Change | YoY % Change |
|---|---|---|---|
| 1 Bedroom | $1,722 | -0.3% | 25.5% |
| 2 Bedroom | $2,047 | -0.4% | 26.8% |
In virtually every state, rents are higher than they were at this time last year. More than ninety-five percent of state markets have experienced considerable rent hikes for both apartment types.
| Unit Type | Markets Up | Markets Down |
|---|---|---|
| 1 Bedroom | 95.5% | 4.6% |
| 2 Bedroom | 93.5% | 6.5% |
Top 10 Cities That Saw the Highest One-bedroom Rent Hikes Year-over-Year:
- Austin, TX (+121.2 percent)
- Long Beach, CA (+62.0 percent)
- Tacoma, WA (+49.8 percent)
- Jersey City, NJ (+48.6 percent)
- New York, NY (+45.8 percent)
- Fremont, CA (+43.2 percent)
- Lexington, KY (+41.6 percent)
- Durham, NC (+39.3 percent)
- Cincinnati, OH (+38.5 percent)
- Montgomery, AL (+37.6 percent)
Top 10 Cities That Saw the Highest One-bedroom Rent Declines Year-over-Year:
- Cleveland, OH (-24.4 percent)
- Pittsburgh, PA (-16.3 percent)
- Indianapolis, IN (-15.5 percent)
- Las Vegas, NV (-14.8 percent)
- Houston, TX (-14.5 percent)
- Norfolk, VA (-9.8 percent)
- St. Louis, MO (-9.2 percent)
- Baltimore, MD (-8.6 percent)
- Albuquerque, NM (-7.4 percent)
- Lubbock, TX (-6.0 percent)
July 2022 Apartment List National Rent Report shows since the beginning of 2022, rents have increased more slowly than they did in 2021, but more quickly than they did in the years preceding the pandemic. In the first six months of 2022, rents climbed by a total of 5.4%, compared to a rise of 8.8% during the same period in 2021. The current year-over-year rent rise is an astounding 14.1% but has been going downward since a peak of 17.8% at the beginning of the year.
Their national index increased by 1.3 percent from May to June. In June, rents jumped in 97 of the nation's 100 biggest cities. In the past year, New York City has had the nation's fastest city-level rent rise, while some of the hottest Sun Belt cities are now exhibiting indications of growth plateauing.
In 2021, the national median rent rose a record 17.5%. This sharp rise in rent costs is contributing to the fastest inflation in 40 years. With inflation on everyone's mind, Apartment List's rent index is especially significant, as market rents precede average rents paid. These rent dynamics indicate what's ahead of the BLS's (Bureau of Labor Statistics) housing inflation projections. Rent increase in 2022 has moderated from last summer's high, thankfully for tenants but rents are rising faster than in pre-pandemic years.
- In the first half of this year, their national rent index has increased by 5.4 percent, well below last year’s 8.8 percent increase over the same months.
- However, this year’s pace is also still notably faster than that of the years prior to 2021.
- The trend of rent growth is pacing well behind last summer’s scorching pace.
- Based on this year's trends, rent rise in 2022 appears likely to exceed the pre-pandemic average while moderating from 2021 levels.
- Apartment List's vacancy index has been gradually easing since last October when it hit the bottom of 4.1%.
- After seven straight months of growth, their index stayed steady at 5% in June 2022.
- 97 of the nation's 100 largest cities saw rent increases last month, although 73 have seen a smaller rise in 2022 than in 2021.
- NYC has the nation's fastest city-level rent increase.
- NYC rentals rose 27% last year, nearly double the national average.
- Despite early-pandemic reductions, NYC's median rent is currently 17% higher than in March 2020.
- Since the pandemic began, major rental markets in the Sun Belt have had practically constant rent rises.
- But in the past six months, coastal regions have seen some of the greatest growth.
Ten Metropolitan Regions With the Most Rapid Rent Increases Over the Previous Six Months and the Past Year
The Tampa metro has had the fastest rent growth over the course of the pandemic as a whole, with a staggering 42 percent increase. However, growth in Tampa has cooled down in recent months, with a more modest 4.8 percent increase since last December.
The San Jose metropolitan area has experienced the nation's highest rent rise over the previous six months, and the region has just surpassed its March 2020 level, leaving nearby San Francisco as the only metropolitan area where rents are still less expensive than pre-pandemic. Similarly, the New York City, Boston, and Seattle metropolitan areas continue to have robust recoveries.
The most recent rental market stats by Realtor.com shows that in May 2022, the typical rent for a one- or two-bedroom rental house in the United States' 50 biggest metropolitan regions was $1,849 per month. This is the highest level in Realtor.com® rental statistics ever, as well as the 15th month in a row with a new record rent. The median rent in May is 15.5 percent higher than in May 2021, 23.2 percent higher than in May 2020, and 26.6 percent higher than in May 2019.
Though these figures are impressive, they represent a reduction in year-over-year increase when compared to recent months. The annual growth rate for rentals in May 2022 was the smallest since September 2021, and the annual growth rate has fallen each month this calendar year after peaking at 17.3 percent in January.
- The median rent in the top 50 metros reached $1,849, which is 15.5% higher than at this time last year and a new rent record for the 15th month in a row.
- The year-over-year rent growth has decreased every month in 2022 and is at its lowest level since September 2021.
- Studio unit rent growth, after trailing larger unit rent growth until January of this year, continues to lead the charge in increasing prices at the national level.
- In some metropolitan areas with healthy local economies, renting a home is relatively more appealing than buying one, compared to other metros.
- Metros with higher rental vacancy rates are generally among the least expensive metros to rent a home in.
According to the group, the data from May 2022, which indicates a more pronounced decline in rents than we saw earlier in the year, implies that this milestone may be delayed. If rents continue to increase at May's annual rate, rentals will reach $2,000 by October. However, if annual growth continues to decrease as it did between April and May, tenants may not face $2,000 rent until the following year.
If year-over-year rent rise continues to decelerate, rent can level out, as it typically does in the autumn, and renters' financial positions can inch closer to pre-pandemic levels as a result of ongoing wage growth. This rebound is being aided by the current increase in the number of homes listed for sale, which might assist some renters to become first-time homeowners and alleviate some pressure on rental demand.
As expected, rent and listing prices for homes for sale are highly connected. Several markets stand out in terms of their actual median rent relative to what we would anticipate based on their median listing price. Unsurprisingly, Miami is one of these. During the previous several months, rents in Miami have skyrocketed year-over-year, as have listing prices for for-sale properties, which are up 45.9 percent from May 2021.
Even though the median listing price in the Miami metropolitan region exceeds $625,000, the median rent is $727 per month greater (the vertical space between the deepest red circle and the grey line) than the for-sale pricing would indicate. New York City (+$575), Riverside (+$556), Boston (+$490), and San Diego (+$398) are the other metropolitan areas where rent surpasses expectations most.
All five of these markets are ones where housing is just plain expensive. Miami, Boston, and New York are among the 8 markets where active for-sale listings have fallen the most year-over-year. Many people who might otherwise buy a home are instead renting because there aren’t any homes to buy in the centrally located areas where they’re returning to work. This can drive up rent in the city center faster than the prices of the remaining for-sale listings, which may be more distributed throughout the area.
Residential Vacancies and Homeownership Rates
Vacancy rates affect the price of housing. In a market in which there are a lot of vacant homes or apartments, prospective tenants or buyers are at an advantage. On the other hand, in a market in which vacant homes or apartments are scarce, the power dynamic is reversed. The landlords (or sellers) are in a position to tend to bid up the rents. Therefore, when there is an unusually low vacancy, the price of housing will tend to be bid up over time. When there is an unusually high vacancy, the price of housing will tend to be bid down over time.
Let us see how this pandemic-led economic slowdown has impacted the vacancy rates nationally as well as regionally. The vacancy rate is somewhat analogous to the unemployment rate. If the unemployment rate increases, it has a direct impact on vacancy rates. While rental vacancy rates are slightly higher this year compared to last, they remain lower than we’ve seen historically. The Census Bureau reports rental vacancy and homeownership vacancy rates each year through its American Community Survey; you can get these at the city level or in some cases for even more fine-grained areas.
The availability of rental units is a pattern theme in this month's report. According to the Census Bureau, rental vacancy rates have been falling steadily across the country since the 2008 financial crisis, and have dropped precipitously in the South since the commencement of the Covid-19 epidemic. This is consistent with the relocation patterns seen by Realtor.com® over the past few months, and it indicates that Sun Belt rentals will continue to rise.
The rental vacancy rate has decreased the greatest in urban (from 7.3 percent in 2021Q1 to 5.8 percent in 2022Q1) and rural regions (from 7.7 percent to 6.7 percent) during the last year, while it has remained stable in suburban areas (5.8 percent to 5.6 percent ). We have seen a reversal of the early pandemic's rush to the suburbs, as tenants are now grabbing up the abandoned flats in the city.
Though the emphasis of our examination of Realtor.com® rental listing data does not cover rural areas, the availability trends identified by the Census Bureau outside of urban areas indicate that rising rents on fewer units are not only a concern for city inhabitants. Riverside (1.8 percent) and Boston (2.4 percent) had the lowest rates of rental vacancy among the 50 major areas, according to the same Census data, with San Diego (3.7 percent) and New York (4.1 percent) also at the bottom 12.
If these markets seem familiar, it's because rents were substantially higher than listing prices would imply. When rental options are limited, monthly rents rise to the point where owning becomes the more tempting alternative. In contrast, nine of the ten areas with the greatest vacancy rates in the first quarter of 2022 had median rents in the bottom half of May.
Median Rent Prices for Highest-Vacancy Metros
As previously stated, a high vacancy rate might be associated with a variety of other indicators, such as higher unemployment (4.2 percent in Pittsburgh), lower for-sale prices (OKC, $329,150), or a higher median age (Tampa, 43). However, it eventually corresponds with lower asking rents since it shows locations where supply exceeds demand. With the obvious exception of Tampa (and, to a lesser degree, Raleigh and Charlotte), median rent and rent increase in this cluster of high-vacancy metros are among the lowest of the fifty metros we examine, and we expect this to continue until more vacant units are filled.
| Metro | Vacancy Rate Q1 2022 | Median Rent | Rent Rank |
| Indianapolis-Carmel-Anderson, IN | 10.90% | $1,275 | 47 |
| Pittsburgh, PA | 10.60% | $1,528 | 34 |
| Raleigh, NC | 10.10% | $1,652 | 28 |
| Houston-The Woodlands-Sugar Land, TX | 9.70% | $1,444 | 37 |
| Buffalo-Cheektowaga-Niagara Falls, NY | 9.50% | $1,333 | 44 |
| Cincinnati, OH-KY-IN | 9.00% | $1,473 | 35 |
| Oklahoma City, OK | 8.70% | $1,000 | 50 |
| Tampa-St. Petersburg-Clearwater, FL | 8.40% | $2,093 | 12 |
| Birmingham-Hoover, AL | 8.00% | $1,234 | 48 |
| Charlotte-Concord-Gastonia, NC-SC | 7.80% | $1,719 | 26 |
Sources
- https://www.noradarealestate.com/blog/housing-market-predictions/
- https://www.zumper.com/blog/rental-price-data/
- https://www.rent.com/research/average-rent-price-report/
- https://www.apartmentlist.com/research/national-rent-data/
- https://www.noradarealestate.com/blog/new-york-real-estate-market/
- https://www.realtor.com/research/may-2022-rent/
- https://www.census.gov/housing/hvs/index.html
