Amid a historic run of inflation over the last year, the cost of housing—especially rent—has been one of the most significant pressures on household finances.
Renters in many markets are seeing increases of 20% or more as they sign new leases, and with the nationwide rental vacancy rate at just 5.6%, renters have few alternatives to find more affordable options. Researchers calculated the percentage change in median rent from 2019 to 2022 and ranked metros and states accordingly.
The current status of the rental market is a result of both supply and demand, with problems accumulating over time and becoming more acute since the outbreak. On the supply side, the United States is predicted to have a housing deficit of roughly 4 million units.
In many places, zoning and density constraints have made it more difficult to develop housing stock, both for rent and for sale. Because of growing real estate costs, higher-income workers who would otherwise buy a home have accounted for 70% of the rental market increase since 2009. And as more high earners enter or stay in the rental market, builders and developers are incentivized to provide more luxury units, which means less new stock to meet the needs of low- and middle-income earners.
All of these problems have gotten worse since the COVID era. Homeownership is becoming increasingly out of reach for many would-be buyers as property values rise and loan rates rise, keeping more people in the rental market. Builders and developers are likewise straining to meet increased demand while keeping prices in check. Supply chain issues have made obtaining building materials more time-consuming and expensive, while a tight labor market has left hundreds of thousands of construction jobs unfilled.
Rents have skyrocketed in recent months after increasing at fairly steady rates for years.
As a result of these factors, rental prices have risen dramatically in the last year, with a 17 percent year-over-year increase in rental costs from February 2021 to February 2022, according to Zillow data. In comparison, for most of the recent decade, the average year-over-year increase has remained between 3% and 5%. In the first year of the epidemic, increases were as low as 1% while landlords and renters navigated the economic uncertainties of the pandemic, and federal and state governments introduced rental assistance programs and eviction moratoriums to stabilize the market.
Rentals of all sizes saw similar rent increases compared 2019 to now.
From singles or couples renting a studio or one-bedroom flat to families renting a three- or four-bedroom home, no segment of the rental market has been spared the impact of rising rents, according to the Department of Housing and Urban Development the median unit price increased by more than 10% between 2019 and 2022.
Nearly all states experienced rent increases.
The impact of rising rental prices has varied depending on where you live. Many states in the south and the central United States have had lower increases, with one state, Alaska, seeing a 3% fall in rental expenses since 2019. The locations with the highest rent increases are all in the western United States, led by Nevada (26.0%), Idaho (24.1%), and Utah (24.1%). (22.2 percent ).
In recent years, these states have experienced rapid population expansion, aided in part by employees fleeing higher-cost areas like California and Washington in search of more inexpensive markets. But who has increased costs in their new locations in the process? A similar pattern is apparent at the local level. The metros that have seen the fastest increases in rental costs are “second-tier cities” like Sacramento, Las Vegas, Phoenix, and Salt Lake City that has been booming with incoming residents seeking more affordable locations.
The data used in this analysis is from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau. To determine the locations where rents have risen the most, researchers at Stessa calculated the percentage change in median rent from 2019 to 2022. In the event of a tie, the location with the higher total change in median rent from 2019 to 2022 was ranked higher.
Small and midsize metros where rents have risen the most.