Housing hunt turns desperate with record rise in US rents

Boston

SOARING prices. Competition. Desperation. The dramatic conditions for US homebuyers during the past year are now spilling into the market for rentals.

Landlords from Tampa, Florida, to Memphis, Tennessee, and Riverside, California, are jacking up rents at record speeds. For each listing, multiple people apply. Some renters are forced to check into hotels while they hunt after losing out too many times.

"Any desirable rental is going within hours, just like the desirable sales," said Shannon Dopkins, a realtor in Tampa. "One woman passed on a place that was beat up with water damage. Somebody else decided to rent it."

After weakening early in the pandemic as the economy faltered and young people rode out lockdowns with family, the rental market is now seeing record demand. The number of occupied US rental apartment units jumped by about half a million in the second quarter, the biggest annual increase in data going back to 1993, according to industry consultant RealPage. Occupancy last month hit a new high of 96.9 per cent.

Rents on newly signed leases surged 17 per cent in July when compared to what the prior tenant paid, reaching the highest level on record, according to RealPage.

The gains reflect competition for a resource that's getting ever more difficult to obtain: somewhere to live. With prices soaring in the for-sale market, and bidding wars proliferating, would-be buyers on the losing end are being forced back into rentals.

At the same time, young Americans looking for their first apartment are competing with others who delayed plans because of Covid-19. Remote workers - and their high pay cheques - are on the move to lower-cost areas. And small single-family home and condo landlords, tempted by high prices, are cashing out, leaving their tenants desperate for another place.

Eviction bans also are playing a role in keeping the market tight, because about 6 per cent of tenants are normally forced to vacate each year.

The soaring demand is most pronounced in Sun Belt cities that have seen an influx of arrivals from the pandemic. The Phoenix area had the country's biggest increases in rents for single-family houses in June, with an almost 17 per cent surge from a year earlier, according to data released this week from CoreLogic. It was followed by Las Vegas, with a 12.9 per cent gain; Tucson, Arizona, at 12.5 per cent; and Miami, up 12.4 per cent.

It's a reversal from the pre-pandemic norm of tight housing in denser, pricier cities - places such as New York, Boston and San Francisco, which saw office workers flee during lockdowns. Those areas still have an overhang of inventory of high-end apartments aimed at white-collar professionals. BLOOMBERG