Rents across the country are hitting records as the drag from the pandemic wears off, according to two separate reports.
The national median rent increased 5.5% to $1,527 in May, reaching the highest level on records kept by Realtor.com and the fastest growth rate since March 2020 before the pandemic began. At the same time, single-family rents jumped 5.3% year over year in April, according to CoreLogic, marking the biggest annual gain in almost 15 years.
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"The biggest rental increases were not necessarily in the biggest cities," Danielle Hale, chief economist of Realtor.com, told Yahoo Money. "They were in secondary, more affordable markets."
Mid-tier cities showed significant increases in May, according to the Realtor.com report. But in the nation's largest cities, specifically tech hubs, rents declined last month — albeit at a slower rate than before — and still have a ways to go to recover.
"Rents year over year in big markets are still declining," Hale said, but those declines are "getting smaller and smaller." Meanwhile, "month over month rents are increasing, so they're making headway."
Thirty-eight of the 50 largest markets saw rents climb above their pre-pandemic levels, averaging a 9.1% year-over-year pace, driven by emerging tech hubs and suburbs outside of major cities.
For instance, Riverside, California; Memphis; Tampa, Florida; Phoenix; and Sacramento, California, posted gains of more than 15% year-over-year in May.
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"Affordability is really important, especially in an environment of rising price," Hale said. "People don't want to be too far away from job centers, but they're still looking for relatively more space and need their housing dollars to stretch further."
For single-family homes, the biggest annual jumps in rent were in Phoenix (12.2%), Tucson, Arizona (10.6%), Las Vegas (9.3%), and Atlanta (9.1%), according to CoreLogic.
One-bedroom and two-bedroom rents also hit new highs, according to Realtor.com.
As work-from-home arrangements remained in place for many workers, demand for larger spaces only grew. Rents for one-bedroom rentals increased 5.8% from last year to $1,422, while two-bedroom rents jumped 8% to $1,718. Both were the highest levels since March 2019.
The median rent for studios also increased by 1%, the first gain in 10 months.
"People have spent a lot of time at home and are recognizing they could have more space to do more things, have that separation if they are working from home," Hale said. "It will be interesting to see how long this trend lasts as companies open up and bring workers into the office."
Rent declines decelerated in the country's 10 largest tech hubs, falling just 2.3%, better than the 6.6% drop recorded earlier this year.
And big cities hit hardest by the pandemic posted rents that remained at or below pre-COVID levels. For instance, rents dropped 8.3% in San Francisco and 7.3% in San Jose, while remaining flat in New York. Rents would need to increase an additional 9% to 12% in these markets to return to peak prices.
"Rents are varied depending on how the local market is," Hale said. "It really highlights how the pandemic economy, disruption, and recovery played out very much depending on industry and location. There are lots of different trajectories."