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Browse the siteMarch 23 2022
In February, national rents grew 17.1% year-over-year to a new high of $1,792 per month, representing a higher share of household incomes (29.7%) than in 2021 (24.8%)
SANTA CLARA, Calif., March 23, 2022 -- New rental data shows affordability issues are on the rise, as Americans spent 30% of their monthly budgets on rents in February on average, according to the Realtor.com Monthly Rental Report released today. February rents accounted for an even higher portion of household incomes in 14 of the 50 largest U.S. markets, with the list of least affordable areas dominated by Sun Belt metros like Miami, Tampa, Fla. and San Diego, Calif.
In February, the U.S. median rental price hit a new high of $1,792 and soared by double-digit percentages (+17.1% year-over-year) for the seventh month in a row. Among unit sizes, studio rents increased at the fastest annual pace, up 17.1% (+$215) to a median of $1,474. Larger unit rents also posted double-digit gains over February 2021: 1-bedrooms, up 16.4% (+$232) to $1,648; and 2-bedrooms, up 16.2% ($278) to $2,002.
"Whether it's rent or mortgage payments, the general rule of thumb is to keep monthly housing costs to less than 30% of your income. And with rents surging nationwide, February data indicates that many renters' budgets may be stretched beyond the affordability limit," said Realtor.com® Chief Economist Danielle Hale. "With rents up by nearly 20% over the past two years, rental prices are likely to remain high, but we do expect some cooling from the recent accelerated pace. In light of mounting economic uncertainties and the conflict in Ukraine, some households will prefer to buy, in an effort to lock-in a largely fixed monthly payment as a hedge against further inflation. But fast-rising mortgage rates and still-limited numbers of homes for sale could mean some would-be buyers may stick with the flexibility of renting. With rental demand already outmatching supply, rental affordability will remain a challenge. For renters eager to make the transition to first-time buying, finding a relatively affordable rental is key to saving for a downpayment. Tools like the Realtor.com® Rent vs. Buy Calculator can help you frame the numbers in a meaningful way and make the choice that is right for you."
February data indicates that rents are increasingly straining Americans' budgets, representing roughly 30% of typical household incomes. Year-over-year rent growth in February 2022 was four-times higher when compared to March 2020, before the onset of COVID, highlighting limited supply relative to demand. The acceleration in rents is largely driven by a growing segment of young households, many of whom are turning to renting in the face of the for-sale inventory crunch, record-high listing prices and climbing mortgage rates. In turn, many of the least affordable rental markets are also some of the most competitive areas for buying. These trends are illustrated in Sun Belt metros like Miami, Tampa and San Diego, which topped February's lists of fastest-growing and least affordable rental markets, as well as the hottest homebuying destinations.
Although rental affordability is dwindling at the national level, February data offers some good news for some renters, depending on where they live. In many large markets in Middle America, for instance, February rents came in below the recommended max share of monthly paychecks. Additionally, the area accounted for more than half of February's most affordable rental markets, including Kansas City, Oklahoma City and St. Louis. Still, with February rent growth outpacing incomes even in these relatively affordable areas, renters devoted more of their monthly paychecks towards housing costs than in 2021.
About Realtor.com®
Realtor.com® makes buying, selling, renting and living in homes easier and more rewarding for everyone. Realtor.com® pioneered the world of digital real estate more than 25 years ago, and today through its website and mobile apps offers a marketplace where people can learn about their options, trust in the transparency of information provided to them, and get services and resources that are personalized to their needs. Using proprietary data science and machine learning technology, Realtor.com® pairs buyers and sellers with local agents in their market, helping take the guesswork out of buying and selling a home. For professionals, Realtor.com® is a trusted provider of consumer connections and branding solutions that help them succeed in today's on-demand world. Realtor.com® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. For more information, visit Realtor.com®.