Rental Price Fluctuations
According to Zillow’s rental report for May 2023, asking rents increased by 0.6% during April and May. This rise in rent prices indicates a steady upward trajectory. It is important to note that approximately 35% of U.S. households rent their homes, according to the 2017-2021 Census Bureau data.
Factors Impacting Rent Prices
- One significant factor is inflation. Rising costs across various sectors, such as increased wages for maintenance workers and repair expenses, lead landlords to pass on these higher costs to renters. This creates a cyclical effect where rent costs contribute to inflation, further impacting rental prices.
- Another factor is the lack of available rental inventory. There is a shortage of vacant rental properties in general, particularly affordable ones. This scarcity drives up demand, resulting in higher rent prices.
- Expired rent freezes and discounts also play a role in rent increases. Landlords, who previously offered rent freezes and steep discounts during the pandemic, are now adjusting prices on new units and lease renewals to make up for the lost revenue.
- The shifting workforce, accelerated by the pandemic, has had an impact on rental prices. Remote work’s popularity led to increased demand for larger homes in previously low-cost areas. This migration to suburban areas has driven up rents more in those regions than it has lowered them in urban areas, resulting in a net increase in rents.
- Additionally, there is a growing demand for studio and one-bedroom apartments as more prospective renters prefer living alone. This increased demand for smaller units contributes to higher rent prices.
Current Rent Trends
Rent Burden and Affordability