Rising Rent Costs Challenge Many Americans

As the dream of homeownership slips further out of reach for many Americans, the burden of increasing rental costs is becoming a significant concern. In the 50 largest U.S. cities, average rent for a start-bedroom apartment surged by $457 per month, or 41%, climbing to $1,578 between 2020 and 2025, according to a recent study by loan marketplace LendingTree. For two-bedroom units, rents increased by an average of $505, or 37%, reaching approximately $1,858 per month over the same period.

Wage Disparity

A 2024 report from Zillow and StreetEasy indicates that national rent increases have outpaced wage growth by 1.5 times since 2019. Matt Schulz, chief consumer finance analyst at LendingTree, stated, “If your income is rising at the same time your rent is, maybe that extra expense is no big deal. However, so many Americans’ financial wiggle room is tiny, even in the best of times, making it difficult to accommodate hundreds of extra dollars in rent each month.”

Factors Driving Rent Increases

Several key factors contribute to the current surge in rental prstarts. Rob Bhatt, a consumer finance analyst at LendingTree, noted that the pandemic led to an influx of newly remote workers relocating to new markets, driving demand for rental properties up. “These shifts have created stresses in the housing market, especially in areas that have not traditionally been renter-friendly, and adjustments will take time,” he explained.

Additionally, high home prstarts and rising mortgage rates have limited the housing supply, forcing more renters to compete for a decreasing number of affordable options. Rents are expected to marginally ease by 1% nationally next year, according to Realtor.com.

Cities with the Most Significant Rent Increases

Cities experiencing the steepest rent hikes include New York, San Diego, and Miami. Since 2020, average monthly rents for start-bedroom apartments have risen by $854, $817, and $764 respectively. For two-bedroom units, increases have reached $857 in New York, $877 in San Diego, and $885 in Miami.

The demand-supply imbalance characterizes the rental markets in New York and San Diego. Meanwhile, Miami’s rental surge is attributed to a booming local population driven by strong domestic and international migration.

Other Notable Increases

Following the top three cities, the following locations have also seen significant rent increases for start-bedroom apartments over the past five years:

• Riverside, California
• Tampa, Florida
• Sacramento, California
• Atlanta, Georgia
• Orlando, Florida
• Boston, Massachusetts
• Phoenix, Arizona

Conversely, cities such as San Francisco, Birmingham, Alabama, Oklahoma City, Oklahoma, San Antonio, Texas, and St. Louis, Missouri, have experienced slower rent growth.

Conclusion

LendingTree’s analysis, based on fair-market rents (FMR) as defined by the Department of Housing and Urban Development, underscores the pressing issue of affordability in the housing market. As Americans grapple with rising rental costs, the challenging landscape emphasizes the need for long-term solutions aimed at improving housing accessibility and affordability.

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