Apartment Rents Nudged Up in February
At 0.6%, the pace is more tepid than last summer’s eye-popping increases but still above pre-pandemic norms.
Apartment rents ticked up 0.6% in February, a pace that’s more tepid than last summer’s eye-popping increases but still above pre-pandemic norms.
A new report from Apartment List notes that year-over-year rent growth currently stands at a “staggering” 17.6 percent, but most of that growth took place last spring and summer. Over the last quarter, rents have gone up by just 0.7%.
“This is a bit slower than the 0.8 percent increase that we saw last February, when the 2021 rent growth boom was just starting to pick up steam. It’s also well below the 2.1 percent average monthly rent growth that we saw from last March through September,” the report notes. “But even if growth has cooled down substantially from last summer’s peak, it is also pacing well ahead of the pre-pandemic norm for this time of year. From 2017 to 2020, February rent growth averaged just 0.3 percent; this month’s increase was double that rate.”
Apartment List analysts also note that the national median rent, which stands at $1,321, is now $126 more than it would have been if rent growth since the start of the pandemic had been in line with the average growth rates of 2018 and 2019.
“Rent growth over the past year has far outpaced that of any prior year in our estimates, which go back to 2017. For comparison, year-over-year rent growth in February averaged just 2.4 percent in the three years preceding the pandemic,” the report states.
On the supply side, Apartment List’s national vacancy index is indicating a “gradual easing of the tight market conditions that have characterized the rental market over the past year,” with the firm estimating the national vacancy rate will hit 4.5% this month. Rents also increased in February in 74 of the nation’s 100 largest cities, with Sun Belt markets such as Phoenix and Miami posting the most impressive growth numbers.
Rent has grown fastest over the last year in Miami, Tampa, Orlando, Phoenix, and Las Vegas. It’s increased the most since March 2020 in Tampa, Phoenix, Riverside, Las Vegas, and Miami—all of which have seen increases in excess of 30%.
“If 2020 was characterized by price convergence (expensive cities getting cheaper and cheaper cities getting more expensive), 2021 was characterized by price inflation: cities large and small getting more expensive, rapidly,” the report points out. “Whereas 2021 saw rapid rent growth across the US, different parts of the country are now seeing prices trend in opposite directions.”