By Nathalie Voit
Annual rent growth in 2021 averaged 10.1%, pushing the U.S. median rental price in December to $1,781, Realtor.com said in its Monthly Rental Report released Jan. 26.
December marks the sixth consecutive month of double-digit growth for zero-to-two-bedroom properties. Rents for the month rose 19.3% year-over-year, relatively flat from the previous month’s levels but still posting double-digit yearly increases, December’s report said.
December’s gains were led by surging home prices in Miami, Tampa, and Orlando, FL., which all reported price growth of over 34%, with Miami taking the top spot at a record 49.8%, Realtor.com said.
Apart from Miami, Tampa, and Orlando, FL., median rents in December 2021 increased the most in Las Vegas, NV (29.8%), Memphis, TN (29.4%), and San Diego-Carlsbad, CA (29.3%).
Rental prices for one-bedroom units increased the most in December, surging by 19.3% or $267 to settle at $1,651. After one-bedroom units, rental prices for two-bedroom units climbed the most year-over-year, rising by 19.1% or $320 to $2,003. Studio rental prices increased by 18.6% or $230 in the twelve months leading through December 2021 to hit a two-year high of $1,462, according to Realtor.com rental data.
Compared to December 2019, the median rent for one-bedroom, two-bedroom, and studios in December 2021 grew 20.0%, 23.9%, and 13.5%, respectively.
Nationally, the U.S. rental market grew by an average of 10.1% in 2021, meaning that national rents across the country were over 10% higher in 2021 than they were in 2020. The figure is equivalent to an average pace of rental price growth that’s over five times higher than the 2020 rate of 1.9% and above 2022’s forecasted growth of 7.1%, Realtor.com said.
Two-bedroom units saw the most significant price growth over the year, increasing by $196 during the past 12 months to reach an average rate of 11.7%. According to the report, higher prices for two-bedroom units were driven by consistent preferences for more space.
Rent growth for one-bedroom units in 2021 also increased significantly, rising by $139 over the year to settle at 10.0% growth on average. Studio rent prices grew by less, increasing by 6.1% year-over-year.
“On average, in 2021, national rents were more than 10% higher than in 2020. As our December report further illustrates, this average understates the wild ride that the rental market, and many renters, experienced in 2021. Rents started the year roughly flat and gained incredible momentum throughout the year, hitting double-digit yearly pace by summer and continuing to surge through December,” said Realtor.com Chief Economist Danielle Hale.
“While yearly growth is still strong, monthly growth cooled in December, which is typical for this time of year and not expected to last. With rents already at a high and expected to keep going up, rental affordability will increasingly challenge many Americans in 2022. For those thinking about making the transition from renting to buying their first home, rising rents will remain a motivating factor even as for-sale home prices and mortgage rates continue to climb.”