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Economy

Rents across U.S. rise above $2,000 a month for the first time ever

College students Sanaa Sodhi, right, and Cheryl Tugade look for apartments in Berkeley, Calif. in March of this year.
Eric Risberg
/
AP
College students Sanaa Sodhi, right, and Cheryl Tugade look for apartments in Berkeley, Calif. in March of this year.

Kim Drotar is a public school teacher who rents an apartment in St Louis. But she doesn't have the best neighbors.

"They're 19, 20 and have parties and bang on my door in the middle of the night and, you know, just to be jerks," she says.

Drotar's a single mom with a daughter in 5th grade. She's been trying to find a house she can afford to buy.

"I just want some place where she can ride her bike and make friends with the neighbors and play with the kids and they can come over."

But she keeps getting outbid when she makes offers. And now with mortgage rates up sharply she says she's just been priced out completely. Meanwhile, continuing to rent is getting harder to afford, too.

Kim Drotar says her rent rising by 22% this year is making it harder for her to save for a down payment on a house.
/ Kim Drotar
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Kim Drotar
Kim Drotar says her rent rising by 22% this year is making it harder for her to save for a down payment on a house.

"My rent is increasing 22% this year," she says. "It's harder and harder to save more for a down payment."

A new report from Redfin shows that nationally listed rents for available apartments rose 15% from a year ago. And the median listed rent for an available apartment rose above $2,000 a month for the first time.

Rents are up more than 30% in Austin, Seattle, and Cincinnati. In Los Angeles the median asking rent is $3,400. Even in formerly affordable cities such as Nashville it's now $2,140, up 32% from last year.

"Housing is getting less affordable for everyone at every level," says Daryl Fairweather, the chief economist for Redfin. She says after the last housing crash we didn't build enough homes for a decade. And that lack of supply is the biggest force pushing up home prices and making it harder for people like Drotar to afford to buy a home.

Fairweather says homebuilders built fewer homes in the decade starting in 2010 than in any 10-year period since the 1960's. "So I think it's going to take at least another decade to dig ourselves out of this hole. " She says states changing zoning laws to allow for smaller, more affordable homes built closer together would help.

Meanwhile, more people stuck renting when they would rather own a home helps keep demand and prices up in the rental market, too.

"Rents are going up just as fast as home prices are," says Fairweather.

It's worth noting that the Redfin report tracks asking prices for vacant units available to rent. So it does not mean that everyone currently renting is seeing their rent go up by so much. And the data in some cities may skew to the higher end of the market since it misses some mom-and-pop type landlord listings.

Government consumer price data show that the average rent Americans actually pay — not just the change in price for new listings — rose 4.8% over the past year, which is a higher than usual rate of increase.

The increased demand for rentals from people who would rather buy a home is likely to continue. Mortgage applications to purchase a house are 21% lower than a year ago as rising interest rates continue to price more would-be homebuyers out of the market.

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