As the cost of daily goods continues to rise across the country, so too does the cost of living – and according to one report, the average asking price for a rental apartment is at the highest it’s been in at least three years.
A new analysis from Redfin, a real estate brokerage firm, the median cost of rent in the U.S. surpassed $2,000 per month in May, a 15% increase from the same time last year, when the median rent hovered around $1,700. It was the first time the median rent surpassed $2,000 since 2019, when Redfin first began tracking the data.
Rent prices have been steadily rising since near the beginning of last year, according to Redfin’s analysis – but the company only calculates the cost of new leases available in apartment buildings, meaning the $2,000 sum “is not the median of what all renters are paying, but the median cost of apartments that were available for new renters during the report month,” the company said.
“More people are opting to live alone, and rising mortgage-interest rates are forcing would-be homebuyers to keep renting,” Redfin deputy chief economist Taylor Marr wrote in a statement. “Although we expect rent-price growth to continue to slow in the coming months, it will likely remain high, causing ongoing affordability issues for renters.”
The city that saw the highest year-to-year rent increase on new leases was Austin, Texas, where rent shot up a whopping 48% from 2021. Seattle, Cincinnati and Nashville, Tennessee were all tied at a 32% increase in median rent, followed by Florida’s Miami, Fort Lauderdale and West Palm Beach at 29%.
In a separate survey of renters and landlords by Realtor.com, more than 66% of tenants said higher rents were the biggest strain on their finances, while about 76% noted they’re unable to save as much money every month as they did a year ago.
Tenants are likely to see further rent hikes this year. About 72% of the landlords surveyed said they were planning to increase rents within 12 months.
Landlords have the leverage to ask for higher rents because demand is strong. Years of rising home prices and a recent surge in mortgage rates have left many would-be homebuyers with little choice but to keep renting.
Developers are responding by ramping up apartment construction to the fastest pace in decades.
Newly started construction of apartment buildings climbed to a seasonally adjusted annual rate of 612,000 units in April, according to the Commerce Department. That’s up 42.3% from a year earlier and the fastest seasonally adjusted annual rate since April 1986.
That additional supply should help eventually, but it can take months or years for projects to hit the market, especially given supply chain and labor constraints that have delayed all manner of construction during the pandemic.
