Apartment rents are shooting up in hundreds of cities across the U.S. Here's why.
Apartment rents across the U.S. are surging in almost 400 cities, with the average price for a 1-bedroom having shot up more than 25% since June 2021, according to Rent.com. The typical cost for a two-bedroom unit is up 26.5% over that period.
The reasons: A severe shortage of affordable housing, rising home prices and soaring inflation.
"You had a lot of people at the end of 2020 beginning of 2021 looking to buy a home and then the housing market really shot up — turned a lot of people away from buying a home towards renting," Brian Carberry, senior managing editor of Apartmentguide.com, told CBS News.
In better news for Americans looking for a place to live, rents have remained relatively flat this year.
"We could start to see stabilization as we go into the end of summer," Carberry said.
The housing markets around the country that have seen the sharpest rent increases: the New York City metro area; Boston, Massachusetts; Miami, Florida; San Francisco, California; Seattle, Washington; and Austin, Texas. In Austin, for example, rent prices are up more than 100% compared to 2021.
"People are paying more than $1,000 a month additional now compared to a year ago," Carberry said.
In New York City, the average monthly rent stands at a whopping $5,812. In Pflugerville, Texas, an Austin suburb, the average monthly rent is $4,451. In Jersey City, New Jersey, renters can expect to shell out $4,421 on average, according to Apartmentguide.com.
More inventory hitting the market could provide some relief. But as long as mortgage rates remain elevated, more Americans will be inclined to rent rather than taking the plunge into homeownership.
Renting is cheaper than buying in three-quarters of the country's 50 largest metro areas, according to Realtor.com. On average, first-time homebuyers can expect their monthly payments to top $2,400, versus $1,876 to rent the typical apartment.
"So when that [mortgage] rate starts coming down we then may start to see some movement from renters to buyers, but until that happens we are still seeing a lot of upward pressure on those rental properties," Carberry said.