(Bloomberg) -- Rents are soaring in many U.S. cities as the economy rebounds, squeezing the budgets of tenants who also face increased risk of eviction after courts overturned a pandemic-era ban.There’s no single indicator that captures a complex national picture, as Covid-19 drove major shifts in where people live and work. Still, data point to tight markets in much of the country.The median monthly charge on a vacant rental jumped by $185 in March from a year earlier, according to the U.S. Census Bureau. A national index compiled by Apartmentlist.com shows that rents rose 1.9% in April alone, the most in data going back to 2017.
The rising costs will pile pressure on poorer families who are more likely to rent -– and less likely to be earning money right now, in a recovery that’s seen better-paid jobs bounce back faster. For low-income Americans, shelter accounts for 40% of spending.Adding another risk, a federal judge in Washington ruled on Wednesday that the Centers for Disease Control and Prevention had exceeded its authority by ordering a nationwide moratorium on tenant evictions last year.
The ban, due to last through June, had loopholes that allowed some evictions to proceed -– but it still offered protection for those who’d lost their jobs. About 24% of renters, roughly 8 million people, missed at least one housing payment since March 2020 according to the Mortgage Bankers Association.
Rapid Rebound
The early months of the pandemic saw a headline-grabbing decline in prices for some expensive urban markets, like Manhattan and San Francisco. Higher-income workers were able to move out of city-center apartments to work remotely from somewhere else.One result was a lot of unoccupied high-end properties in such places. That may have exaggerated the jump in median costs for vacant rentals as measured by the Census Bureau, creating what’s called a “compositional effect” that skews the data, according to Chris Salvati, a housing economist at Apartmentlist.com.The declines in some regions offset gains elsewhere and kept national measures fairly steady last year, Salvati said. But he now sees prices rising in all the places where they fell last year -– and pretty much everywhere else too.
“I’ve been surprised at how quickly things have rebounded over these past couple of months,” he said.
The latest monthly survey by Fannie Mae suggests Americans expect the median increase in rent to be 5.3% this year, close to the highest in the past decade.
Even in the exodus cities, rents in less central districts typically didn’t plunge last year. In many mid-sized markets, there was a steady increase. Cities like Richmond, Virginia; Fresno, California; and Dayton, Ohio, saw a plunge in rental vacancies, limiting supply and pushing prices up.“Outside of the gateways and a select few other top 30 markets, most other metros had positive year-over-year rent growth,” research firm Yardi Matrix said in its latest monthly National Multifamily Report.
Areas where rents have risen more than 10% year-on-year include Boise City, Idaho, and Riverside, California, according to Zillow data.
Some of the pandemic rental trends are extensions of older ones. For example, rents rose about 5% in the past year in Tampa, Florida, and Atlanta, where there’s been strong migration and limited rental supply. Both cities have seen increases of around 30% over five years, according to Zillow data.Over that period, only New York City among the 100 largest national markets has posted a drop in rental prices. But that could be a temporary effect of the pandemic, which may get wiped out as vaccines drive the city’s recovery.
Manhattan leases surged an annual 89% in March, the fastest pace on record, according to Miller Samuel Real Estate Appraisers & Consultants. It found that the net effective median rent has risen for four straight months -- at “the highest rate in a decade.”
©2021 Bloomberg L.P.
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