Recent surges in rent prices have made it appear as though the pandemic never happened, according to recent market reports from Zillow®. The rebounding rental market was red-hot in July, as rent prices surged beyond levels they would’ve been based on pre-pandemic trends.
According to Zillow, rent growth continued to build on the momentum that began in March, as U.S. typical monthly rents rose by 9.2%, or $156, in July compared to the same period last year.
The breakdown:
– Typical U.S. rents grew 9.2% year-over-year in July to $1,843 per month.
– July rents were 2.9% ($52) higher than they would have been without the pandemic.
– Cities that saw the highest rent growth were Phoenix (+23.1%), Las Vegas (22.7%), Tampa (21.4%) and Riverside(19.9%).
– For-sale home prices saw a 2% monthly gain and 16.7% YoY appreciation.
– Austin saw the most significant year-over-year price growth (41.5%), while New Orleans had the lowest increase (11.6%).
– Home inventory grew by 4.5% from June to July.
– July marks the third consecutive month of rising supply.
What it means:
The rental market has been on the upswing since the spring, following suit with the for-sale market, which has been booming under low inventory and high demand—among other factors.
While both scenarios are signs of a post-pandemic recovery, they could also present affordability issues in both markets.
Despite record-level U.S. home appreciation in July, the report indicated that a market cooling is likely, with almost half of the nation’s 50 largest metros experiencing slower monthly growth than in June.
According to Zillow, the rebalancing in the for-sale market will also come from an uptick in inventory.
Record home value growth persisted in July, topping its annual gains in the process with a YoY increase of 16.7% and a monthly gain of 2%.
“With the economy continuing to reopen, employees receiving more long-term guidance on remote work and as students find their way back to college campuses, the rental market is picking back up,” said Nicole Bachaud, Zillow’s economic data analyst. “As high demand puts pressure on rents and incomes are unable to keep up, affordability will become more of a challenge in the coming months.”
Jordan Grice is RISMedia’s associate content editor. Email him your real estate news ideas to jgrice@rismedia.com.
