Every one of the nation’s 100 largest metro areas has seen month-over-month rent growth. This has been occurring the past 5 months. Zillow data shows the national increase as well, up an average of 11.5% or $200, compared to last year. Some single-family suburbs and neighborhoods have been seeing price spikes from 15-21%.
Home prices first spiked after the pandemic due to everyone entering back in the market at once. While the renter market is slower paced and took longer for the surge of renters to come back in the market. The increase of people moving is causing increased demand in both rent and homes since there is a limited supply helping inflate these prices.
Many view renting as a steppingstone to home ownership. This past year many people are moving from cities into suburbs and smaller towns. The main reason for this is due to the price’s cities are charging for rent and homes prices many can’t afford so are forced to relocate. This causes an increase in demand for rentals and homes when’s there’s not enough supply to keep up. Vacancy rates are at historical lows and have shrunk 36% this year. Currently only 3.8% of rentals are still vacant.
All of this is accompanied by seasonal trends, summer is known for a hotter market and higher growth for rentals. Entering fall and winter this tends to slow down and rentals aren’t in such of a hurry. The resumption of evictions could cause a reduction of price pressure by opening up new vacancies. Prices of course will be higher going into 2022 then they were entering 2021.