Nationwide, rent prices grew by 2.9 percent year-over-year in December 2019 — down from 3 percent in November. Overall growth, however, is still high and fueled mostly by the dearth of affordable homes on the market.
“Strong economic growth, including the lowest unemployment rate in over 50 years, helped push up rents by an average of 3 percent in 2019, which was the fastest annual rent appreciation since 2016,” Molly Boesel, principal economist at CoreLogic, said in a prepared statement.
Rent for homes valued 75 percent less than an area’s median price grew by 3.4 percent year-over-year while rent for homes valued 125 percent more than an area’s median price grew by only 2.5 percent. The Southwest is still seeing the highest spikes in rent prices nationwide, with Phoenix, Tucson and Las Vegas experiencing the highest growth at 6.7, 5.7 and 5.1 percent, respectively.
Rent spikes are often precipitated by strong economic and population growth, according to CoreLogic. As people relocate for work, the local housing market struggles to keep up with demand for homes. Austin, Texas, saw employment growth of 3.5 percent and, as a result, rent hikes of 3.8 percent in December.
“Employment growth is expected to remain strong in 2020. This, coupled with rental vacancies reaching a 34-year low in the last quarter of 2019, could lead to continued rent increases in the near term,” Boesel said.