National Asking Rents, Mortgage Payments Soared In February
Nationally, asking rents were up 15% in February, while homebuyer mortgage payments increased twice as fast, Redfin reported.
Redfin reported the largest year-over-year national apartment rent increase since 2020 when February’s rise came in at 15 percent while mortgage payments spiked by 31 percent. Both figures are the highest since Redfin began tracking this in 2019.
The average monthly asking rent stands at $1,901, according to its report and the mortgage payment soared to $1,716.
“The cost of housing is going up for homebuyers and renters, but it’s going up more quickly for homebuyers,” Redfin Chief Economist Daryl Fairweather said in prepared remarks. “That’s because mortgage rates have increased sharply and will likely continue to do so.
“When the cost of homeownership increases, many potential homebuyers opt to rent instead, which drives up rental prices. Americans should brace themselves for continued inflation across the board and try to find ways to cut costs.”
He said that might mean driving less to save on gas, or moving to a more affordable, walkable city like Albuquerque or Buffalo, where you can save on both housing and gas.
“The job market is great for workers right now, so it is a good time to move even if you can’t work remotely,” he added.
RCLCO surveyed the real estate industry at year-end 2021 and asked about the historic rental rate increases, and if rates were expected to continue to rise. It tells GlobeSt that approximately two-thirds of respondents felt apartment rental rate growth would continue to be above historic levels throughout 2022, so it is unlikely that renters will have relief in the near-term.
Austin Rents Jump Most
Rent increases hit 40% in Austin with Portland not far behind at 39%. The Tri-State Area and Florida also saw rental increases of 30% or more.
Just two of the 50 most-populous metro areas saw rents fall in February from a year earlier. Rents declined 3% in Milwaukee and 2% in Kansas City.
Job Growth Fueling Austin Market, Nation
Kelly Mangold, Principal at RCLCO Real Estate Consulting, tells GlobeSt.com that this rise in pricing has been driven by many factors, a competitive for-sale housing market with limited inventory has driven more households to rent, which in turn has caused rental rates to rise.
“A strong job market and households returning to rentals after the early lockdown stages of the pandemic have also contributed to a surge in demand for rental housing,” Mangold said.
“This year has seen rental rates rise to historic rates. Austin is a market that has experienced a significant amount of job growth and in-migration. Austin benefits from large companies like Google, Tesla, Oracle, and others opening offices in the metro area, and overall strong growth in tech and other professional services jobs.
Strong economic and employment growth had resulted in unprecedented levels of demand for multi-housing rental units, Geraldine Guichardo, global head of research, hotels and director, Americas living research, at JLL, tells GlobeSt.com. “This coupled with limited new supply has pushed asking rents to extraordinary levels, particularly in high-growth markets that are benefitting from positive net-migration trends.”