Goodbye City Life: Rising Rents Match Homebuying Hotspots
Realtor.com® January Rental Report finds declines in expensive high-tech hubs persist, while smaller markets that offer quality of life become less affordable
- Nationally, rents continue to grow slower than pre-pandemic levels, but this trend may be reversing itself
- Cities seeing the largest rent growth -- New Orleans, Sacramento, Calif., Rochester, N.Y., and Riverside, Calif. -- are among metros with the fastest growing home prices
- The Bay Area along with Seattle, Boston, Los Angeles and Washington, D.C. post some of the largest declines in rents
SANTA CLARA, Calif., Feb. 18, 2021 /PRNewswire/ -- Renters, much like homeowners, are favoring smaller more affordable markets that offer highly rated schools, strong local economies and more space over expensive tech hubs, a trend that is pushing rents up in many of the same markets where home prices are rising the most, according to the realtor.com® Monthly Rental Report released today.
"Although rents across the U.S. have been growing at a slower pace since the onset of COVID-19 and the major tech hubs continue to see declines, some markets are seeing rents grow by double digits," said realtor.com® Chief Economist Danielle Hale. "Many of the same factors that attract homebuyers to an area -- highly rated schools, job opportunities, affordability and quality of life -- attract renters. Like homeowners, the pandemic has given many renters the freedom to work remotely, and the rental trends reflect that reality."
In January, the U.S. median rent, which is calculated by averaging the median rent of the 50 largest metros, was up 0.8% to $1,442, below its pre-COVID growth rate of 3.2%. Despite the continued slower growth, January marked the first month since July 2020 where rental growth didn't slow further, indicating that rent growth may have reached a floor.
Seven of the top 10 metros with the largest rent increases in January -- New Orleans*; Sacramento, Calif.; Rochester, N.Y.; Cleveland; Riverside, Calif.; Cincinnati and St. Louis -- were also among the metros where home prices grew more than 5% year-over-year.
Renters typically have more flexibility to move, and with remote work allowing many people to live anywhere, markets that offer affordability are in hot demand.
In California, Riverside and Sacramento have become desirable alternatives to the pricey Bay Area and Los Angeles housing markets. Despite a sizable 9.6% increase in the last year, the median rent in the Riverside metro was $1,858 in January, 25.4% lower than the median rent in neighboring Los Angeles. Likewise, the median rent in Sacramento was $1,649 in January, still 36.8% lower than the median rent in San Francisco despite its 11.0% rise in the last year.
Four of the top 10 markets with the largest year-over-year rent increases in January are located in the Midwest, a region that in recent years has attracted affordability-minded homeseekers looking for an alternative to the pricer coastal markets.
Markets With the Largest Rent Increases in January 2021
Metro | Median Rent | Rent YoY |
$1,300 | 18.2% | |
$1,649 | 11.0% | |
$1,154 | 9.9% | |
$1,070 | 9.7% | |
$1,858 | 9.6% | |
$1,054 | 8.8% | |
$1,083 | 8.3% | |
$1,000 | 8.1% | |
$1,075 | 7.5% | |
$1,215 | 7.0% |
Markets With the Largest Rent Decreases in January 2021
Metro | Median Rent | Rent YoY |
$2,610 | -12.6% | |
$2,670 | -11.1% | |
$1,709 | -8.9% | |
$2,240 | -8.2% | |
$1,095 | -6.0% | |
$2,490 | -5.1% | |
$1,840 | -4.6% | |
$1,302 | -3.6% | |
$1,605 | -3.4% | |
$1,313 | -2.7% |
Rental Data - 50 Largest Metropolitan Areas January 2021
Metro | Median Rent | Rent YoY |
$1,420 | 4.0% | |
$1,313 | -2.7% | |
$1,520 | 1.7% | |
$976 | 3.8% | |
$2,240 | -8.2% | |
$1,095 | -6.0% | |
$1,295 | 2.4% | |
$1,600 | -1.5% | |
$1,083 | 8.3% | |
$1,070 | 9.7% | |
$1,060 | 2.9% | |
$1,255 | -0.2% | |
$1,605 | -3.4% | |
$1,137 | 5.8% | |
$1,449 | 3.5% | |
$1,185 | -0.8% | |
$1,054 | 8.8% | |
$1,164 | 3.5% | |
$1,068 | 3.2% | |
$1,238 | 6.4% | |
$2,490 | -5.1% | |
$964 | 4.0% | |
$1,000 | 8.1% | |
$1,854 | 0.0% | |
$1,345 | -0.7% | |
$1,425 | -1.7% | |
$1,310 | 0.2% | |
$1,300 | 18.2% | |
$2,430 | 6.1% | |
$789 | -1.3% | |
$1,302 | -3.6% | |
$1,550 | 3.3% | |
$1,368 | 3.0% | |
$1,250 | 1.1% | |
$1,490 | -1.1% | |
$1,650 | 6.8% | |
$1,230 | 3.0% | |
$1,129 | 3.8% | |
$1,858 | 9.6% | |
$1,154 | 9.9% | |
$1,649 | 11.0% | |
$1,054 | 2.8% | |
$2,200 | 0.6% | |
$2,610 | -12.6% | |
$2,670 | -11.1% | |
$1,709 | -8.9% | |
$1,075 | 7.5% | |
$1,375 | 6.9% | |
$1,215 | 7.0% | |
$1,840 | -4.6% |
*Editor's Note: New Orleans' exceptional year-over-year growth in median rent was driven by shifts in the underlying inventory of rental units. The number of studio units has declined by 17% year-over-year, while one-bedroom and two-bedroom unit inventory has increased by 50% and 31%, respectively. The larger space commands larger rents, therefore driving up the median rent in the area.
Methodology
Rental units include apartment communities as well as private rentals (condos, townhomes, single-family homes). All units were studio, one-bedroom, or two-bedroom units. National rents were calculated by averaging the medians of the 50 largest metropolitan areas.
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SOURCE realtor.com
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