The rental industry is back in full force, with rents in the 10 biggest U.S. tech cities surpassing March 2020 levels by an average of 6.3%. As we near a post-pandemic market, rents have grown at a double-digit pace (+13.6%) for the second consecutive month, according to the latest realtor.com® Monthly Rental Report.
– Average rents across the 10 biggest U.S. tech cities increased by 9.9% YoY in September
– Average big tech metro rents declined by as much as 7.2% during the pandemic’s peak
– Some cities with September’s largest annual rent growth, such as Austin (+22.3%) and Denver (+15.5%), did not experience the steepest COVID declines among big tech hubs during the pandemic
– But rents are surging even in major metros with the biggest COVID declines—Seattle rents were 8.1% higher in September compared to March 2020, rebounding after declines of 12.3% at its lowest point
– The U.S. median rental price reached a new high of $1,654 in September, up 13.6% YoY
– Annual rent growth in September was four-times faster than in March 2020
– U.S. rents are now 15.5% ($222 per month) higher than in September 2019.
Has the rental industry made a full recovery? According to realtor.com®, significant progress, particularly in large metro areas and tech hubs, showcase a comeback for the markets.
“With rents continuing to surge to new highs nationwide, including in big tech hubs, September data confirms the U.S. rental market has moved past the recovery phase and is fully back in business. Rental demand remains unseasonably high, driven by still-limited housing supply, rising mortgage rates pushing buyers towards renting and more people returning to big cities,” said George Ratiu, manager of Economic Research for realtor.com®, in a statement. “At the same time, it’s important to put recent rental activity in the context of housing trends throughout the pandemic. Rents didn’t rebound from COVID declines as quickly as for-sale home prices, but rental activity has now reached a level not unlike the home-buying frenzy seen earlier this year, before fall seasonality kicked in. The good news is that if rents continue to parallel home listing prices, rental price growth could potentially begin cooling this winter.”
“The days of rental deals in metros like San Francisco and Manhattan may be over, but there is a silver lining for renters with more flexible timelines. Big city rental competition and high prices is a sign of normalcy, which could precede more seasonal norms like winter cooling in rent growth in parts of the U.S.,” Raitu added. “For renters on tighter schedules, compromises will be key to staying on budget and not getting swept up in bidding wars. If location and size are your must-haves, consider deprioritizing extra amenities or upgrades.”