Rents continue to rise at the fastest pace in decades, making housing costlier than ever for many Americans.
Nationally, rents rose a record 11.3% last year, according to real estate research firm CoStar Group. That fast pace of growth remained elevated in the first months of 2022, as many parts of the country continued to notch double-digit jumps in rent prices.
“A supply-demand mismatch is making rents unaffordable,” said Dennis Shea, executive director of the J. Ronald Terwilliger Center for Housing Policy at the Bipartisan Policy Center. “The lowest-income families are being hardest hit by rising rents and a lack of supply.”
The number of people—particularly younger Americans—looking for their own apartments is squeezing an already tight housing market. At the same time, pandemic-related material shortages and construction delays are slowing down the production of new homes and rentals. Experts like Shea say the shortfall of affordable rentals is likely to get even worse in the coming months, as mortgage rates, already reaching highs not seen since 2011 thanks to rising interest rates, drive would-be homeowners to rent instead.
Although few places in the United States have escaped recent hikes, rental spikes have been particularly pronounced along the Sun Belt and in Florida. The state is home to the three metro areas where monthly rent jumped the most: Naples, Sarasota and Tampa. Monthly rents in those cities are up between 29% and 39% in the past two years, according to CoStar.
“The ability to work from home persuaded a lot of households to relocate to warmer, less expensive locations,” said Jay Lybik, national director of multifamily analytics at CoStar. “People started saying, ‘Why am I staying in the Northeast where it’s freezing cold, when I could move to Tampa or Fort Lauderdale, have my own apartment, and be outside all the time?’ We saw huge spikes in demand in those markets.”
There has also been a migration from pricey city centers—such as San Francisco, New York and Washington, D.C.—to more affordable suburbs, particularly as many white-collar workers in high-paying industries such as tech and finance transition to more flexible remote-work arrangements.
And although early in the pandemic, many cities, states and management companies placed limits on rent increases and in some cases, froze prices altogether, most of those measures have expired. In some cases, renters say landlords are factoring in two years’ worth of increases when leases renew.
Overall, CoStar is forecasting another 6% rise in U.S. rents this year, about double pre-pandemic norms.
The burden of rising rents falls heaviest on younger households, as well as on Black and Hispanic families, further exacerbating long-simmering inequalities.
Nationwide, about two-thirds of American families owned their homes as of the end of 2021, according to the Census Bureau, but the same release shows a majority of Black and Hispanic families rent their homes or apartments, while just over a quarter of their White peers do the same.
Separately, 62% of families with heads of household under age 35 rent, compared with 30% of households with a head between ages 45 and 54.
Low-wage workers are also disproportionately being impacted. There is not a single state, metro area or county in the United States where a typical minimum-wage worker can afford a two-bedroom rental, according to a recent study by the National Low Income Housing Coalition.
In Tampa, Max Corey’s rent recently skyrocketed by 30% to more than $1,000 a month. The musician and street artist, who has been living with a roommate for more than two years, says housing has become unaffordable. He’s been picking up food delivery gigs to make ends meet.
Corey briefly looked for his own one-bedroom apartment, but says he was deterred after the asking rent jumped from $1,200 to $1,450 in a matter of weeks.
“It’s embarrassing but I really can’t afford to live alone,” the 34-year-old said. “It feels like every time I’m getting close to getting ahead and getting a little bit more stable, there’s a new challenge.”