In April, The Washington Post published an interactive map which revealed how much rent has changed since the beginning of the pandemic in 1500 searchable U.S. counties. The national average was a record increase of 11.3% in 2021, according to real estate research firm CoStar Group, and continued double-digit growth in many areas into the first months of 2022. In Fort Bend County, Texas, rents have increased 17.5% since 2019, for an average of $1451 per month.
While higher than the national average, Florida has been hit even harder, with Naples, Sarasota and Tampa racking up increases of between 29 percent and 39 percent.
There are several reasons for these increases. Dennis Shea, executive director of the J. Ronald Terwilliger Center for Housing Policy at the Bipartisan Policy Center, said “A supply-demand mismatch is making rents unaffordable. The lowest-income families are being hardest hit by rising rents and a lack of supply.” Shea explained that a high number of people, especially younger Americans, are looking for apartments and that this has combined with supply shortages and construction delays caused by the pandemic to create a shortage.
Furthermore, Mr. Shea warns that the shortfall is likely to get even worse. Rising interest rates are causing would-be homeowners to postpone their home purchase, leading to even more competition for rentals.
Another way in which the pandemic is impacting rents is through remote work, according to Jay Lybik, national director of multifamily analytics at CoStar. “The ability to work from home persuaded a lot of households to relocate to warmer, less expensive locations. 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.”
Remote workers have also migrated outward from expensive urban neighborhoods to nearby suburbs, causing suburban rents to rise. Additionally, pandemic-related limits on rent increases have begun to expire, and some renters are reporting that landlords are factoring in two year’s worth of increases when renewing leases.
Overall, another six percent increase is forecasted for the remainder of 2022, which is about twice the amount of pre-pandemic norms.
Despite rising mortgage rates, homeownership is still the best solution to this dilemma for most families. Once you purchase your home, your monthly payment is locked in until you decide to refinance it.