The price of renting a house is exploding for everyone who can't afford to buy, and Southern cities are getting especially expensive
- Rent prices for single-family homes spiked 6.6% in May, according to property data firm CoreLogic.
- CoreLogic noted that rent growth rates across the country are far higher than a year before.
- Several Southern cities, such as Phoenix and Las Vegas, saw especially large rent hikes.
If you've been priced out of buying a home, there aren't many places to hide. The red-hot rental market is getting increasingly expensive as well.
Rents for houses skyrocketed across the US in May, according to property data firm CoreLogic. According to the company's latest Single-Family Rent Index release Tuesday, single-family house rents increased 6.6% between May 2020 and May 2021, vastly higher than the 1.7% year-over-year increase the year before.
Rent price growth is still accelerating, with May's year-over-year rate higher than CoreLogic's 5.3% increase between April 2020 and April 2021. CoreLogic noted that it's the biggest jump since at least January 2005, and pointed out that because of the red-hot market for buying homes, "would-be first-time buyers are opting to remain renters instead of entering the housing market."
This is just the latest piece of evidence that the US housing market is going wild in a way unseen since the housing bubble of the mid-aughts. This spike in rental prices shows there's little - or no - relief for people shut out of the cutthroat buying market right now.
Cities in the South are seeing especially high rent growth. Across the 10 metropolitan areas across the US with the highest year-over-year growth rates, eight are southern:
Rents across the price spectrum are shooting up, but prices for the most expensive houses are leading the pack. CoreLogic noted that rents for houses that are at least 25% above the median price in their region increased 7.9% year over year, compared to just a 4.6% increase for houses at or below 75% of the regional median. That reverses a long-running trend of faster rent growth for less-expensive homes that held between the middle of the last decade until this year.
The new data from CoreLogic reinforces the trend of single-family house rents skyrocketing across the country. According to Insider's Taylor Borden, the reshuffling of people moving during and after the pandemic has helped fuel a rental boom in places like Phoenix, while people are returning to hard-hit cities like New York and San Francisco, driving up rents nationwide.
Read more: It stinks to buy a home, but renting is a complete nightmare, too
Wall Street has gotten into the game as well, with institutional investors buying a record-high $77 billion in homes over the last six months. That's led to even more competition in the home-buying market, as families are now competing with big money for houses. The pressure from that tight market seems to be filtering down to rentals as well.
Housing is one of the biggest expenses for many American families. Prices generally have been rising in recent months, with consumer price inflation popping 5.4% year-over-year in June. While that spike came mostly from goods like used cars and trucks that are seeing huge shortages and a surplus of demand from the pandemic and reopening, if stickier prices like housing and rent keep shooting up, inflation might be harder to handle and more prolonged than currently expected.