As competition and prices continue to push individuals out of the for-sale market, the heat of the rental market keeps rising alongside it.
Rent prices in January set a new all-time high, with median one-bedroom rent increasing 12 percent year over year to $1,374 and median two-bedroom rent increasing 14.1 percent year over year to $1,698, according to a report from Zumper.
Month over month, median one-bedroom rents increased by 0.6 percent from December (breaking a run of four consecutive months of rent declines) while median two-bedroom rents increased 0.2 percent.
The staggering annual rent increases in January blew previous years’ annual increases out of the water — by comparison, median one-bedroom annual rent growth in January 2021 was 0.6 percent, and in January 2020, it was just 0.3 percent.
“Zumper’s National Index pools rent prices from all over the country and weighs them by population,” Zumper’s report reads. “For the National Index to move by double digits takes incredible rent growth everywhere, and that’s exactly what occurred.”
Larger East Coast cities in particular saw rapid rent growth over the last year, following the rollout of COVID-19 vaccines, as residents decided to move back to cities. Meanwhile, suburban areas also experienced a surge in rent prices as individuals who permanently left cities bought in these areas and priced out other would-be homebuyers who were then pushed into the rental market.
Boston is one exaggerated example of East Coast cities’ rental market resurgence. The New England hub suffered huge losses in the rental market during peak pandemic, with the city’s median one-bedroom rent dropping by 19.2 percent between March 2020 and January 2021. But as of January 2022, the city’s median one-bedroom rent is up 26.5 percent year over year. And compared to March 2020, just before rents started dropping precipitously, Boston’s median one-bedroom rent is up 8.8 percent, “meaning it made up all the ground it lost in 2020 — and then some,” Zumper’s report notes.
Pre-pandemic, on October 21, 2019, the greater Boston area’s real-time apartment availability rate was down to a low of 1.72 percent. Before vaccine rollouts became widespread, around mid-March 2021, apartment availability spiked up to about 11 percent, as people still felt the uncertainty of the pandemic and were still hesitant about city living. As of December 27, 2021, however, the real-time availability rate dipped back below pre-pandemic lows, to a 1.65 percent availability rate.
“We just had such an amazing amount of apartments get absorbed in a short period of time, the likes of which we’ve never seen before,” Salpoglou told Inman.
“It’s like the perfect storm of all things happening at once. You’ve got renters fatigue, you’ve got nothing out in the sales market in the suburbs, you’ve got a lack of new construction getting to the marketplace quick enough, labor shortages … Here we are.”
Salpoglou added that renters are also likely deciding to stay put because of COVID-related factors, like not wanting to find new roommates they feel comfortable with during pandemic times.
“I think people have also figured out who their roommates are and they’re like, ‘I’m just going to go with them if there’s another variation of Omicron,” Salpoglou said. “I already know these people, I already know their habits.’ They’re going with the person that they know and I think that also reduces people’s interest in moving.”
Severely low availability is also causing rents on three, four and five-bedroom apartments to rise, Salpoglou said, which have become increasingly popular with individuals or groups of people working remotely from an apartment who may want an extra room to use as an office or home gym.
The surging rents in the city across the board have positioned it such that rents are now on the cusp of surpassing rent prices in San Francisco, which is currently the second-priciest city for rents, behind New York City.
“It’s hard to overstate how astounding that is,” Zumper’s report states. “In the winter of 2019, San Francisco’s median one-bedroom rent was $1,300 higher than Boston’s … But over the course of 2021, rental patterns in the two cities diverged.”
As of January 2022, rent in San Francisco was only up 6.3 percent year over year. Compared to March 2020, the city’s rent is down by 18.6 percent, meaning it has not yet caught up to its pre-pandemic levels.
“There’s a lot of people asking us if we’re going to beat San Francisco in rents — it wouldn’t surprise me,” Salpoglou said.
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