While the coronavirus pandemic created a share of "softness" in the rental market, rent growth so far in 2021 has been the fastest on record for the data analysts at Apartment List, which has published its National Rent Report for June.
Nationally, and in many individual cities across the country, rents have now surpassed the level where they would have been if rent growth had not been disrupted by the pandemic, according to the report.
Authors Chris Salviati, Igor Popov, and Rob Warnock add that in markets such as San Francisco and New York where so-called 'pandemic pricing' is still in effect, "prices have turned a corner and are now rebounding."
Specifically, they report that their national index increased by 2.3% in June, continuing the trend of rapid price growth since the start of the year. So far in 2021, rental prices have grown 9.2%. For the sake of context, in previous years, growth from January to June is usually just 2 to 3%, they say.
There still exists much variation by region, the authors note and detail in the report on ApartmentList.com.
They report that rental inventory across the nation, like the general housing supply, remains tight, and as vaccine distribution continues to gain momentum, they say, "we may be seeing the release of pent up demand from renters who had been delaying moves due to the pandemic. Whereas last year’s peak moving season was halted by the pandemic, this year’s seasonal spike appears to be making up for lost time."
Investors continue to take a great deal of interest in the single-family rental and build-for-rent markets, as home prices continue to accelerate, competition remains fierce, and ownership remains out of reach to many young adults and first-time buyers.
That said, a study by HireAHelper.com has shown that mortgage payments can be lower than rental payments, on average, without factoring in utilities and property taxes. The study takes an in-depth look at what residents of various metro areas should consider before opting to rent or buy a home.
"Owning a home does appear to be more expensive than renting, and not just in up-front investment, but on an ongoing basis, too, notes Volodymyr Kupriyanov who summarizes the study.
"With utilities, taxes, and other typical costs included, the average cost of homeowning in the U.S. is about $1,556 a month, while renting is $1,143 a month," Kuprivanov notes. "True as that may be in nominal terms, there’s one critical aspect to consider in deciding which is more affordable: household income."
That study showed only two metropolitan areas with renting proving more affordable than owning. Still, many hurdles still exist for hopeful homebuyers, according to the latest Home Price Index from CoreLogic.
"First-time buyers are hitting a wall in many places around the country as the pace of home price rises outpace the benefits of lower borrowing costs. Younger and first-time buyers, including younger millennials, are faced with the challenge of having sufficient savings for a down payment, closing costs and cash reserves,” said Frank Martell, President and CEO of CoreLogic commenting on the company's monthly index. “As we look to the balance of 2021, we expect price rises to continue which could very well push prospective buyers out of the market in many areas and slow home price growth over the next year."
A report from Apartment List earlier this year showed millennials year after year were taking less of an interest in homeownership. In 2018, 11% never saw themselves as homeowners. In 2019, that number rose to 12%. In 2020, the percentage of millennials who never saw themselves buying a home jumped to 18%.