Apartment rent growth hit a staggering 18 percent nationally in 2021, and while prices have tempered a bit this year, rents are continuing to rise at paces exceeding pre-pandemic norms in many parts of the country. And according to a new analysis from Apartment List, prices are rising faster in cities previously deemed “low-cost.”
In Washington, for example, rent growth has been slowest in Seattle and its closest suburbs, “but it accelerates as you move outward into other, more-affordable parts of the state,” Apartment List’s Rob Warnock says. “Near the eastern border with Idaho, pandemic rent growth has reached up to 40 percent in the cities of Spokane and Spokane Valley.”
And in the Sun Belt, “a rapid influx of new residents has burdened virtually every city with high rent inflation, regardless of how expensive they were before the pandemic,” Warnock notes. In Arizona, every city but Scottsdale has posted upticks of more than 30 percent. Tucson rents are up by 41 percent over pre-pandemic norms, and rents in the suburb of Gilbert are up 36 percent.
Florida has seen a reversal of the trend, with prices rising slightly faster in the more-expensive parts of the Sunshine State. Tampa has seen the biggest uptick with rents up 43 percent in the city limits, 44 percent in Clearwater and St. Petersburg, 46 percent in Largo, 51 percent in Bradenton, and 56 percent in Town ‘n’ Country.
Just nine cities are posting median rents below its pre-pandemic level, including five in the Bay Area: Oakland (-9.8 percent), San Francisco (-9.2 percent), San Bruno (-3.1 percent), South San Francisco (-2.2 percent), and Redwood City (-0.4 percent). Two more are in Minnesota: Minneapolis (-2.6 percent) and its nearby suburb of Richfield (-3 percent). The other two are oil towns in West Texas that have been hit hard by turbulence in the energy sector: Midland (-16.9 percent) and Odessa (-17.9 percent).
However, some analysts say the staggering rent growth of the last two years is showing signs of slowing, with a recent report from Apartments.com saying the market is “deteriorating.” Overall, rent growth was negative from July to August, with rents down 0.15% in July.
Jay Lybik, National Director of Multifamily Analytics, CoStar Group, said in prepared remarks, “We’re seeing a complete reversal of market conditions in just 12 months, going from demand significantly outstripping available units to now new deliveries outpacing lackluster demand.”
And another report from Yardi Matrix revealed that the average apartment asking rents recently decreased for the first time in 2022, dropping by $1 to $1,718.
“Rent growth tends to slow in the fall, but this year comes at the tail end of the unprecedented increases. The deceleration in August was strongest in many of the markets that have had the most growth over the past two years, a sign that affordability is becoming an issue,” the report states.