The rent may be too damn high.
Much to the dismay of tenants, rental prices continued their upward surge, jumping 19.8% annually in January in the nation’s 50 largest metropolitan areas, according to a recent Realtor.com® report. That’s the eighth month prices have risen by double digits as rents hit a median $1,789 a month in January. The report looked at studios and one- and two-bedroom units.
Price hikes were the steepest in Sun Belt cities such as Miami, where prices rose more than 50%, and other Florida hot spots.
“Renters who are looking for a new place to call home are probably going to have to pay more,” says Danielle Hale, chief economist of Realtor.com. “Even the slowest-growing markets are still growing by 7.2%.”
That means tenants should prepare to spend more for less space in the current market.
The price of a studio has gone up the most, increasing 21% ($256 more per month) year over year, to $1,476 in the 50 largest metros. One- and two-bedroom units are both up 19.2% year over year, to $1,652 and $2,000 respectively.
Miami, in particular, was brutal for renters. The median rent in this market shot up 52.4% year over year in January, to a staggering $2,895 a month. That was the biggest increase in the nation’s 50 largest metros.
Next up was the Tampa market, with rents up 37.5%, reaching a median of $2,070 a month, and Orlando, where they rose 34.8%, to $1,820.
South Florida real estate agents are saying locals are getting priced out as renters with deep pockets hailing from the Northeast and the West Coast are moving in and upping the competition.
“It’s probably not the best time to be renting at the moment, especially if you’re thinking of being in a place like Miami for the next two to three years. The inventory is so tight. Plus, people end up compromising location,” says Joanna Hawkins, a Miami-based real estate agent with Compass. “I don’t think we’re going to have enough inventory for three to five years. There are several projects under construction, but they’re not going to be completed for five to 10 years.”
The other markets seeing the highest price growth were Jacksonville, FL; San Diego; Austin, TX; Las Vegas; Phoenix; Memphis, TN; and Riverside, CA. Rents increased by more than 25% compared with last January.
Real estate agent Hawkins says for those who can’t afford sky-high rent prices in South Florida markets or bright spots in the Sun Belt market, it makes the most sense to consider seeking out a starter home or looking to rent in neighboring cities that may be more affordable.
“The ones who are having problems are the locals in these markets with rising rent prices because of inflation, the cost of living has gone up,” says Hawkins. “People are not used to paying those kinds of rents.”