City rents are surging past pre-pandemic levels across the U.S., and 44 of the top 50 MSAs now have higher median rent costs than in February 2020, according to data from Zillow.
“It is a big readjustment, after another big readjustment during the pandemic,” said Danielle Hale, chief economist at Realtor.com.
According to Hale, rents are growing fastest in cities seen as viable alternatives to large urban areas. The fastest-growing rents “tend to be [in] areas that are affordable, that are not super far away from the large [urban] areas, but far enough away that you can get a good deal,” she said.
Riverside, California, has posted the biggest increases over the last year, with typical rents jumping nearly 10% for a studio and 32% for a two-bedroom apartment. However, a comparable two-bedroom would cost $600 or $700 more in Los Angeles than in Riverside, making the smaller city attractive to Angelenos now able to work remotely since the pandemic.
Meanwhile, Silicon Valley workers have decamped from the Bay Area to places like Sacramento, driving the median rent 20% higher over the last year to a median of $1,800.
The frenzy in homebuying isn’t helping home prices and rents. There arefor sale today than a year ago, and the few houses that are available are increasingly going to cash-rich buyers or investors. That’s pushing up home prices, with the result that 4 in 10 counties nationwide are deemed “unaffordable” for homeownership.
Many first-time homebuyers, who have fewer resources, are finding they can’t compete — and have to keep renting.