The Sun Belt has been the worst hit, with the top ten cities with rent increases coming from the southern states. Florida had four cities in the top ten: Miami, Orlando, Tampa, and Jacksonville. Arizona, California, Tennessee, and Texas also have cities in the top ten.
Unsurprisingly, the increase in rent corresponds with a decrease in affordable rentals. The Department of Housing and Urban Development (HUD) defines “cost burden” as households spending more than 30% of their income on housing. HUD defines “severe cost burden” households as those that spend more than 50% of their income on housing. It is becoming increasingly common for households to fall into those two categories. Even before the recent rent increases, 48.4% of renters were cost-burdened in 2019, according to Census data.
One way to measure rental affordability is to look at the median rent in a city and compare it to the median income, called rent share. In Miami, which has seen the largest rent increase in the country over the past year, the rent share is 59.5%. Los Angeles is second, with median rent equalling 46% of median income in the city.
Two-bedroom rentals saw the largest increase in price over the past two years. Studio apartment rents initially decreased during the pandemic, but have been rapidly rising as more people return to urban areas.
The rent hikes are hurting ordinary Americans but it has been a boon for large real estate investment firms. In a recent 60 Minutes interview, CEO of Tricon Residential Gary Berman stated that they currently own 30,000 single-family rental homes, mostly in the Sun Belt.
Tricon has seen profits increase 67% over the past year.
Buying a house to avoid increasing rental costs is not a viable option for many Americans either.
With investment firms buying up houses, prices increased 20% last year and home buying site Zillow predicts mortgages will be 16.4% higher next year.
An alternative for some might be to move to colder locales in the middle of the country. Kansas City (19.9%) Oklahoma City (21.1%) and Denver (21.9%) had the lowest rent shares in the top 50 metro areas in the US.