Rent prices in February hit a new high with a national average of $1,792 in the 50 largest metropolitan areas in the country, marking an over 17 percent increase from this time last year, according to a report.
The report from Realtor.com indicated that the spike in rent prices followed a notable dip in 2020 and into 2021 amid COVID-19-related rent deals.
But now an increase in prices has been seen and felt in cities across the country.
Prices spike across the country
In New York City, median rental prices increased by 23.5 percent in Manhattan, over 10 percent in Brooklyn and 14.5 percent in northwest Queens in February compared to rates from last year, a report from New York City real estate company Douglas Elliman found.
On the West Coast, rent prices in Seattle were up by almost 19 percent in April compared to April 2021. The median price for a one bedroom apartment in Seattle was $1,681, and it was $2,097 for a two bedroom, according to a report from Apartment List.
Some increases seen in the middle of the country were slightly lower than in other cities, but they were substantial nonetheless. In Chicago, April rent prices were up 12.5 percent compared to the same time last year, with a one bedroom apartment costing $1,285 per month on average, according to Apartment List.
Southern cities were not immune to the spikes either, with a steep increase of nearly 22 percent in Nashville’s rent prices compared to last year’s figures, Apartment List reported.
Rob Warnock, a senior research associate at Apartment List, told The Hill he has also seen these spiking prices in cities that pre-pandemic were ”considered to be more affordable and maybe less attractive,” citing places such as Spokane, Wash., Boise, Idaho, and Asheville, N.C.
“For the folks who have been living here, you know, their circumstances haven’t changed much, they just are suddenly now in a far worse situation if they were to hit the rental market and need to compete with all this new demand,” Warnock explained.
He added that while prices are rising at a pace faster than that seen before the pandemic, the rate of increase is still lower than in 2021.
What is driving prices up?
Several compounding variables have contributed to surging housing prices, according to Diane Yentel, president and CEO of the National Low Income Housing Coalition.
Yentel specifically said that the supply of housing for both single family homes and apartments was restricted by zoning laws, “chronically underfunded” housing subsidies and high demand that simply exceeds the supply.
All of those factors existed before the pandemic and were only worsened by COVID-19 as construction slowed and costs increased, all while pent up demand from groups such as young adults who perhaps spent the early months of the pandemic at home with their parents skyrocketed, she said.
At the same time, more people who may have considered buying a home have looked to rent due to spiking home prices. Because they are willing to pay more in rent, prices are driven up further, Yentel said to The Hill.
Who is most affected?
“As the rental market gets more competitive and brings in more higher income households, the folks who feel this the most are obviously folks on the lower end of the income spectrum whose incomes have not been rising as quickly as prices,” Warnock explained.
Yentel added that those low-income renters are disproportionately people of color.
“That’s a result of decades of racist housing policies that purposefully put homeownership out of reach for tens of millions of Black Americans,” she explained.
What’s next?
“Most obviously we need more apartments,” Yentel said of a potential solution.
“Now, doing that will take time and still won’t make rents affordable for the lowest income renters, for very low or extremely low income renters,” she added, calling for increased federal subsidies and rental assistance.
She also said that many potential solutions are part of the Build Back Better Act, which passed the House of Representatives late last year but stalled in the Senate.
“If we were able to get those housing investments across the finish line and enacted, it could have a quick impact on alleviating the pain for many of the lowest income renters,” Yentel said.
But looking forward, some experts say renters should not expect to see a return to former lower prices.
“I don’t think these cities that have seen rapid rent increases over the last 24 months are going to see a reversal of that,” Warnock said. “I think things will normalize a bit for sure. I think 2021 was definitely abnormal in that way. But the conditions are still ripe for prices to continue to go up, especially as the vacancy rate remains so low.”