Renters are being drawn to smaller markets due to their lower costs and the opportunity for more space amid the pandemic—but they may now be facing rising rental rates.
“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,” says Danielle Hale, realtor.com®’s chief economist. “Many of the same factors that attract home buyers 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.”
The U.S. median rent in January eked out a 0.8% increase to $1,442, which is still below the pre-COVID growth rate of 3.2%, according to realtor.com®’s January Rental Report, released Thursday. January, however, marked the first month since July 2020 that rental growth did not slow further, the report notes.
The report also notes that seven of the top 10 metros with the largest rent increases last month were also among the metros where home prices increased more than 5% year-over-year. Those metros included New Orleans; Sacramento, Calif.; Rochester, N.Y.; Cleveland; Riverside, Calif.; Cincinnati; and St. Louis, Mo. Also, four of the top 10 markets with the largest annual rent increases are located in the Midwest, an area of the country that tends to offer more affordability than coastal regions.