Rent Is Skyrocketing Across US, Average Income Can't Keep Up With The Pace

Rental prices in the U.S. have jumped 20% from March 2020 to 2022, a recent report from Realtor.com.

The pandemic initially placed a moratorium on evictions and stimulus money helped keep up with rent prices. The numbers show that rents significantly rose after an initial slowdown in 2020 because of the COVID-19 pandemic.

The Realtor.com report revealed that asking rents are 1.2 times higher than they were two years ago. When looking at year-over-year differences, rents grew four times faster, up 17%, year-over -year in March 2022.

"March data highlights rising rental affordability challenges faced by many Americans today," said Realtor.com Chief Economist Daniel Hale.

Hale also said that rising rent prices cannot keep up with this blistering pace. With incomes not keeping up with rising rent prices, it is going to be hard for realtors to expect tenants to pay up to 30% of their monthly paychecks.

A strong job market is not enough if paychecks are not keeping up with rising costs because of inflation.

"Expect cooling to continue over time, but the jury is still out on whether rent growth will hit single-digits by the end of 2022," Hale said.

Ultimately, "rents won't be able to sustain an accelerated pace if incomes can't keep up," Hale added

In March, the median rent price hit $1,807, up 19.3% over two years, marking the eighth-straight month of double-digit rent-price growth. The report says that the reason for the dramatic two-year jump is rising home prices and mortgage rates driving those who would typically be buyers to rent.

Another reason for the increased demand for living spaces is the growth in remote work. With more demand for living spaces in areas where rents may typically be lower, rental prices increased rapidly for two-bedrooms, up 21.9% from March 2020, and one-bedrooms, up 17.9%. Americans' movements during the COVID-19 pandemic from populous, expensive cities to more affordable areas have also driven prices up.

Though cooling is expected, Hale does not expect price reductions in rent to be significant by the end of 2022.