Tourists walk through a park in Chicago, on May 26, 2024.
Jamie Kelter Davis/Bloomberg via Getty Images
Many major U.S. cities have seen apartment prices soar in the past year, even as the typical American has seen pandemic-era rent inflation cool substantially.
For example, renters in Syracuse, New York, saw monthly rents for one- and two-bedroom apartments on the market jump the most relative to other big cities: by 29% and 25%, respectively, since June 2023, according to data in Zumper’s National Rent Report.
Zumper analyzed median asking rents for apartment listings in the largest 100 U.S. cities by population.
Rents have also risen by at least 10% for both one- and two-bedroom apartments in other major metros: Lincoln, Nebraska; Chicago; Buffalo, New York; Madison, Wisconsin; Rochester, New York; and New York City, according to Zumper.
Conversely, renters in other cities are seeing relief.
Asking rents for one-bedroom apartments have declined by at least 5% in Oakland, California; Memphis and Chattanooga, Tennessee; Cincinnati, Ohio; Colorado Springs, Colorado; Irving, Texas; Jacksonville, Florida; and Raleigh, Greensboro and Durham, North Carolina, according to the analysis.
By comparison, national prices overall for one- and two-bedroom apartments are up 1.5% and 2.1%, respectively, since June 2023, Zumper found.
New York is the most expensive metro for renters: The typical renter pays $4,300 a month for a one-bedroom apartment, it found.
By comparison, in Akron, Ohio, and Wichita, Kansas — which tied for the lowest big-city rents — renters pay $730 a month for a one-bedroom apartment.
What causes rent inflation
At a high level, rent inflation is guided by supply-and-demand dynamics, said Crystal Chen, an analyst who authored the Zumper analysis.
Basically, areas with fast-growing rents are seeing demand outstrip the supply of available apartments, while those with falling rents have seen their apartment inventories growing.
For example, the apartment vacancy rate in New York City recently dropped to 1.4%, a historic low dating to the 1960s, according to the New York City Department of Housing Preservation and Development. The vacancy rate “nosedived” from 4.5% just two years ago, the agency said.
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“The data is clear, the demand to live in our city is far outpacing our ability to build housing,” New York City Mayor Eric Adams said in a statement about the vacancy rate.
Swelling rents can present financial challenges for households.
In May, a typical renter would have spent almost 30% of their income on a new rental, according to Zillow.
While down from a recent peak near 31% in June 2022, it exceeds the roughly 28% that was common before the pandemic, according to Zillow data.
About 86% of New York City residents with the lowest income (less than $25,000 a year) are severely rent burdened, according to the New York City Department of Housing Preservation and Development. An increase in financial strain has caused “an alarming increase in missed rent payments and arrears” relative to 2021, it said.
High rents can have other cascading impacts.
For example, they may limit the ability of prospective homebuyers to save for a down payment, “keeping them on the sidelines of the housing market,” Fitch said in a global housing outlook.
Rent inflation has fallen substantially
Rent inflation plummeted in the early days of the Covid-19 pandemic.
“Pretty much everyone” sheltered in place during the health crisis, and digital nomads who no longer had to work in a physical office left cities in favor of the suburbs and outdoor spaces, Chen said.
However, rents spiked through 2022 and into 2023 amid return-to-office policies and as people moved back to bigger cities, Chen said.
Annual rent inflation largely hovered between 3% and 4% the the years leading up to the pandemic, and peaked around 9% in early 2023, according to the consumer price index. It has gradually cooled since then, to about 5% in May, according to consumer price index data.