Rents on newly signed leases surged 17% in July when compared to what the prior tenant paid, reaching the highest level on record, according to RealPage
Landlords across US regions of Florida, California, Tampa and Memphis are raising rents at record speeds. A number of people are applying against each listing. Some renters are even forced to check into hotels while they search rental properties.
Any desirable rental is going within hours, just like the desirable sales, said Shannon Dopkins, a Realtor in Tampa.
After weakening early in the pandemic as the economy faltered and young people rode out lockdowns with family, the rental market is now seeing record demand. The number of occupied U.S. rental-apartment units jumped by about half a million in the second quarter, the biggest annual increase in data going back to 1993, according to industry consultant RealPage Inc. Last month, occupancy hit a new high of 96.9%.
Rents on newly signed leases surged 17% in July when compared to what the prior tenant paid, reaching the highest level on record, according to RealPage.
The gains reflect competition for housing. Potential property buyers find themselves on the losing end as they are being forced back into rentals with prices soaring in the for-sale market, and bidding wars proliferating.
At the same time, young Americans looking for their first apartment are competing with others who delayed plans because of the pandemic. Remote workers are on the move to lower-cost areas. And small single-family home and condo landlords are cashing out, leaving their tenants desperate for another place.
The entire housing market is on fire, across the board from homeownership to rental, from high-end to low-end, from coast to coast, said Mark Zandi, chief economist for Moody’s Analytics. It’s a basic need but it’s increasingly out of reach.
Eviction bans also are playing a role in keeping the market tight, because nearly 6% of tenants are normally forced to vacate each year. Zandi estimates the country’s shortage of affordable rentals is the worst since at least the post-World War II period.
Developers are adding new supply. But in the short run, the squeeze will have economic consequences because workers can’t easily move for jobs and will have less to spend on things other than housing. Soaring rental costs also are a contributor to the Federal Reserve’s inflation expectations.
They may not yet be accurately reflected in some measures. Owners’ equivalent rent of residences, which makes up almost a quarter of the consumer price index, rose 2.4% in July from a year earlier. That figure “lags the reality” because it’s based on a survey of homeowner expectations about what their home would rent for, Zandi said.
