Renting a Home May Be Even Harder Than Buying One

As limited supply and double-digit price increases push a growing number of prospective buyers out of the housing market, demand for single-family rental homes is hitting an all-time high, but increased competition and a similar lack of inventory are making the rental market an even more difficult alternative. Remote workers and young families are leaving coastal cities and driving up demand in the Sunbelt, where prices are now skyrocketing at the start of 2022, according to National Mortgage News. 

Rental prices for single-family homes rose an average of 7.8% in 2021 with a 12% year-over-year jump in December, causing monthly rents in cities like Miami to rise by a staggering 35.7%. Also, as high-income buyers turn their attention to the rental market, luxury units are in high demand, putting more rental properties into the hands of investors and pushing them further out of reach for entry-level renters looking for affordable housing. 

Housing economist Jay Parsons said pressure on the rental market is unlikely to let up any time soon because of an overall shift in the desirability of renting.

“By far, the fastest growing demographics for housing is coming from upper-income groups,” he said. There has been a significant increase in household formation since summer 2020 as high-income Americans have continued to see their wealth increase, said Parsons, head of economics and industry principals for RealPage Inc., a real estate technology firm.

Rents in coastal cities hard-hit by the pandemic, like New York City, have started to recover while rents have remained high in Sun Belt cities, suggesting that pandemic migration trends aren’t reversing, Parsons said.

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