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The 17th consecutive month saw record rents in the US

The record-breaking July rents reached a 17-month high, placing more pressure on renters.

According to Realtor.com, the national median rent reached $1,879 per month in July. This is 12.3% higher than a year ago. Although rents have been at new heights for almost a year and a half, there are early signs that the market is cooling off. July was the sixth consecutive month of moderate growth after a 17% increase in rents in January.

However, rents increased by double-digit percentages in all sizes of homes in July compared with a year ago. Monthly rents for studios rose 14.3% to $1555, one-bedrooms rose 12.2% to $1745 and two-bedrooms rose 11.7% to $2103.

Rent increases have been the most dramatic in the Northeast and South. For the 10th consecutive month, Miami saw the largest rent increase among all 50 major US cities. New York, Boston, and Chicago followed closely behind Orlando.

Renters are often scrambling for a place to rent or deciding to take on the rent increases. According to Avail’s survey, renting an apartment is more expensive than moving into one.

New leases have seen renters experience higher price increases – on average, $300 per month more than their previous rent – as opposed to renewals which saw an average jump of $160 per month.

Danielle Hale is Realtor.com’s chief economic economist. She stated that renters, whether in a suburb or downtown, are caught between a rock or a hard place when deciding on affordability.

Rents are rising all over, even in the most affordable suburbs

According to Realtor.com, urban rents are rising slightly faster than suburban rents after being hard hit by the pandemic. Urban rents have seen a 12.8% increase in rent growth, compared to an 11.7% increase in suburban rents in July, which was 11.7%. This is a reverse of January 2021 when urban rent declined by 2.5% and suburban rent rose by 3.9%.

The rental market is not back to pre-pandemic levels. Although cities remain more expensive than the rest, the gap between city and urban rents has been closing. In July 2019, a renter would have had to pay 12.4% more to live in an urban location. However, that premium was only 5.8%, or $107 per month in July 2022.

Hale stated that renting is almost as expensive now in suburbs as it was three years ago when rent price premiums were mainly concentrated in urban centers. However, the rise of remote work has led to a surge in rental demand.

She stated that downtown rents are no longer at a lower premium because of the return to office work and the appeal city life offers. This is causing a relative increase in urban rent growth.

Hale stated, “Put simply: Renters feel it everywhere.”

Expected cooling in rent growth

There may be some relief.

Hale stated that July data showed that rent growth has slowed to a slower pace than in 2021.

According to Avail’s quarterly survey of landlords, 72% reported that they planned to increase rents in the next year. However, the rate held steady in quarter two after jumping significantly from January to April according to Avail.

Landlords were asked why they planned to raise rents. They cited increased property management costs, such as tax payments and maintenance and upkeep, and higher utilities. According to the survey, fewer landlords intend to sell their properties in July than they did in January due to cooling sales and rising rents.

Ryan Coon, Avail cofounder, and VP of Rentals at Realtor.com stated that landlords feel financial pains just like renters.

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