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- A Realtor.com report found that rent in some smaller cities saw double-digit growth over the past year.
- Larger cities, on the other hand, saw big drops in rents as working from home allowed residents to leave.
- The divergence in urban rents shows how the pandemic is reshaping the economy’s housing sector.
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In affordable cities near major tech hubs that would typically attract homebuyers, rent prices have increased by double-digit percentages over the past year.
According to a report released on Thursday from Realtor.com, rents have declined in expensive, tech-hub cities such as San Francisco, Washington, DC, and Seattle, while rents in more affordable cities like New Orleans and Sacramento have seen increases of 18.2% and 11%, respectively. The cities with the largest increases in rent prices aligned with the cities with the fastest-growing home prices, the report said.
“Rents are rising in many of the same markets where home prices are rising,” the report said. “Many of the same factors that attract homebuyers – good schools, job opportunities, affordability, and more – attract renters, and the rental trends reflect that reality.”
The data is further evidence that the pandemic has reshaped the housing sector, along with more people buying houses during the pandemic, a trend only boosted by mortgage rates setting several record lows throughout December.
With working from home becoming the new normal since the pandemic began, the report said many seemed to move to places such as Sacramento and Riverside, which allowed them to be close to “major hubs” while living in more affordable cities.
Earlier today, Insider's Hillary Hoffower reported on how the housing market is exacerbating the millennial wealth gap, as more millennials bought houses in 2020 than any other generation did during the year, while more millennials than ever have lost faith in becoming a homeowner someday. The percentage of millennials planning to rent forever was up by a double-digit percentage from the previous year - and they could be facing higher rents in the new set of "work from home" cities.
The significant rent increases could raise alarms for those who are facing financial hardships brought on by COVID-19, and President Joe Biden has already taken steps to ease burdens on both renters and homeowners.
On Tuesday, Biden extended the moratorium on home foreclosures through June 30, and on his first day in office, he extended the moratorium on evictions through the end of March.
—Joe Biden (@JoeBiden) January 17, 2021
According to the National Low Income Housing Coalition, 30 million to 40 million renters would have been at risk of losing their homes without the extension.