When Rebecca DiLorenzo’s landlord of 14 months informed her that he would be raising the rent by $300 a month on the apartment in East Greenwich, Rhode Island, she shares with her fiancé, Kyle, she started to look around for a place to buy.
“Our mindset last spring was, ‘We’re getting married, we need to buy a house’ and for a while we were going to open houses every weekend, but the market was just getting crazier and crazier,” she said.
After getting outbid on four houses — by as much as $50,000 — DiLorenzo knew they needed a Plan B. “We didn’t want to stay in our rental because it would have cost almost double what a mortgage would have been, but we also didn’t want to buy a house we really couldn’t afford,” she said.
Priced out of both the sales and rental market, the soon-to-be newlyweds are now living with family until things settle down.
This scenario is becoming increasingly familiar, said Rick Sharga, executive vice president of RealtyTrac, a real estate information company.
“First there was nothing to buy and now there’s nothing to rent," he said. "The eviction ban has also frozen a lot of inventory that would have otherwise come to market.”
Availability is limited across the board, said Jay Parsons, deputy chief economist for RealPage, a leading provider of home rental analytics. “Apartment occupancy is now at the highest level in at least three decades, and it’s a similar story in single-family rentals,” Parsons said.
“There’s a great reshuffling under way and everyone’s moving all at once,” said Nicole Bachaud, an economic data analyst with Zillow. This includes workers moving out of shared situations and transitioning back to the office, ‘digital nomads’ exploring new locations now that they have more guidance from their employers, and new grads moving for their first jobs.
Competition is pushing rents higher in places like Phoenix, Riverside in California, Tampa, South Florida (especially West Palm Beach and Fort Lauderdale, but even Miami as well), Atlanta, Memphis, as well as Texas, the Carolinas, and most of the Sun Belt and Mountain regions, according to Parsons.
“It’s bonkers,” said Jeff Andrews, data journalist at Zumper, a national rental listing platform. “In ‘normal’ times you see steady growth in any given market, but the rent increases that are happening now — and the intensity and pace of it — is unprecedented. It’s not something we’ve ever seen in the U.S.”
In some markets, prices are increasing daily. Nowhere is this more apparent than in markets that were hit the hardest and are now rebounding quickly, such as New York City.
“Things started turning around in April as the city reopened, and now everything’s going in a ‘New York minute,’” said Brown Harris Stevens’ Justine Bray, who has worked in real estate in city for 27 years. “It’s insane.”
Recently, Bray was working with a client in Thailand who was eyeing an apartment in New York City’s Murray Hill.
“This apartment went from $5,164 to $5,559, then $5,715, $5,882, $5,929," she recalled. "So every day my client was waking up and seeing it was costing more. We ended up getting it in July for a little over $6,200."
Prices are escalating even after contracts have been signed.
Pam Crocker recently experienced this firsthand when she put in an offer — at full asking price — for a luxury two-bedroom rental apartment on Manhattan’s Upper East Side. After making a deposit (including first months’ rent plus security), and signing the lease, she waited patiently for the owner who had accepted the offer to countersign.
“There was one delay after the next and they kept telling me there were all these other higher offers," Crocker said. "I was getting annoyed to the point where I almost backed out, but I had my heart set on this apartment.”
It ended up costing her $1,200 more per month than the initially accepted offer. “I’ve done a lot of real estate transactions and owned villas in Jamaica, but had never been jerked around like this,” said Crocker.
When will things simmer down? Soon, Parsons said.
“What we’re seeing right now in the for-sale housing market is likely a sign of things to come in rental housing later this year," Parsons said, "where the market goes from ‘really, really hot’ to just ‘hot.’”
Personal Finance Journalist Vera Gibbons is a former staff writer for SmartMoney magazine and a former correspondent for Kiplinger's Personal Finance. Vera, who spent over a decade as an on air Financial Analyst for MSNBC, currently serves as co-host of the weekly nonpolitical news podcast she founded, NoPo. She lives in Palm Beach, Florida.