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Rents soared in many U.S. cities last year — and may keep rising in 2022

MoneyWatch: Rent prices soar across U.S.
MoneyWatch: Rent prices soar across the U.S. 04:53

Americans can't seem to catch a break when looking for a place to live: The monthly rent in America's 50 largest cities rose an average of 14% in 2021, while climbing far higher in the most coveted markets, housing data show. 

In December, the average listed rent in the U.S. was $1,877 per month, according to Redfin, a Seattle-based real estate brokerage. Growing housing costs add to the financial pinch Americans are feeling from inflation, which is rising at its fastest pace in decades

Austin, Texas, saw the biggest increase last year, with average rent rocketing up 40% compared to 2020. Redfin economist Daryl Fairweather called the surge "mind-boggling." 

For comparison, in 2020, average monthly rents across the U.S. rose only 3% compared to a year earlier, according to Redfin data. 

Other metropolitan areas where rents shot up last year:

  • Nassau County, New York — 35%
  • New York, New York — 35%
  • Newark, New Jersey — 35%
  • New Brunswick, New Jersey — 35%
  • Miami, Florida — 34%
  • West Palm Beach, Florida — 34%
  • Fort Lauderdale, Florida — 34%
  • Jacksonville, Florida — 31%
  • Portland, Oregon — 29%

Only one larger city — Kansas City, Missouri — where rents fell 0.8%, saw costs decline, according to Redfin. 

Of course, for most Americans buying a home remains a distant dream. Inventories of both new and existing homes remain slim, pushing up prices, while monthly mortgage payments are climbing, raising the cost of homeownership. Median home prices are rising faster than average weekly wages in 1,013 of 1,154 U.S. counties, according to real estate analytics firm Attom

Zillow projects home prices will increase 11% in 2022 04:00

With homeownership out of reach, more people are renting, which drives up prices. 

"Because of the increase in mortgage rates, buying a home is more unaffordable, so people turning to the rental market, making rents more expensive," Fairweather told CBS MoneyWatch.

Consumers expect rents to continue to rise by 10% in the year ahead, according to a recent survey by the Federal Reserve Bank of New York. 

"I think that rents still have more room to grow, just by looking at how much home prices have gone up. A lot of people are priced out of homeownership and will move to the rental market instead," Fairweather said. 

What you need to consider when looking to buy a home 05:26

Rents dropped in the early months of the pandemic in big cities like New York as some city dwellers gave up their apartments to live with parents or relatives.

"In 2020, the story was divergence," said Igor Popov, chief economist at Apartment List, an online marketplace for listings. "Coastal, expensive job hubs like New York, Seattle, Los Angeles and San Francisco saw massive rent drops as demand declined for urban living and more affordable, smaller suburbs and midsize metros picked up steam."

But larger cities started to rebound in 2021 as pandemic restrictions eased and COVID-19 vaccines arrived. 

"People with roommates started looking for their own place. There were some divorces, and people that huddled together in early lockdown era of pandemic all went off to try to their own space — and there was no inventory to meet them in the market," Popov said. He expects to see households consolidate again, to share the rent burden. 

"That's how relief happens in market. Is either moving or joining forces with family or roommates or someone else to split the living cost," Popov said. 

The shift by millions of Americans to remote work has also constrained the housing supply. For example, some remote workers held on to their big-city leases even as they move to cheaper metros as more employers liberated them from the office.  

"People realized they had the opportunity to go someplace else while working from home, and they were not staying in their current location. But at the same time, because of the undersupply of housing, this increased demand and has pushed rents up," said Selma Hepp, chief economist at CoreLogic, a provider housing market data and analytics. 

This "reshuffling" also put pressure on the already limited supply of affordable rental housing in smaller cities, she said. "When you have an influx of higher-income population into an area it puts pressure on local residents."

Seeking cheaper pastures

Jeff Tucker, senior economist at online real estate marketplace Zillow, said more people ditched metro areas like Seattle, San Francisco and Boston for cities in Texas and Florida. 

"A lot of people are running the numbers and making the move. That is causing the faster rent growth in those destinations," he told CBS MoneyWatch.

Having to put off homeownership while facing skyrocketing rents, a lot of home seekers simply don't know where to turn. 

"If renting seems expensive, the option to buy a first home is also a more expensive proposition," Tucker said.

That's when migration takes place, according to Tucker. "A lot of people are considering what are the necessities about where to live — can I move to a more affordable neighborhood, city in the region, or move to another part of the country altogether?"

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