With tech companies beginning to announce their return to office plans, the rental markets in the nation’s largest tech hubs began to turn around in April, while rental markets across the country took a big step toward returning to pre-pandemic norms, according to the realtor.com® Monthly Rental Report released today.
In April, the U.S. median rent averaged $1,483, up 2.7% year-over-year and the fastest growth since March 2020. Prior to the onset of COVID in March 2020, rents were growing 3.2% annually. Rents in the nation’s largest tech cities, which saw prices fall dramatically in 2020 due to remote work, were down 5.4% from a year ago, an improvement from the 6.6% decline registered in February.
“Overall, the U.S. rental market is beginning to return to pre-pandemic levels. With the largest growth occurring outside of major cities, renters are encountering different scenarios depending on the market in which they are searching and size of the unit they are looking for. For instance, the median rent for a two-bedroom unit in Charlotte, N.C. is up 11% year-over-year while a similar sized apartment in Boston is renting for nearly 4% less than a year ago,” said realtor.com® Chief Economist Danielle Hale. “In tech centers, rent declines are getting smaller, signaling they are on the path to turnaround. If the trend continues, renters could expect to be paying pre-pandemic rates by as early as this fall.”
The tech market recovery
In April, the median rent in the nation’s tech centers was $2,086, up 1.1% from March. Although rents continue to be lower in the largest tech centers like San Jose, Calif. (-12.5%), San Francisco (-10.9%), and Seattle (-7.3%), the declines are lessening, especially for larger two-bedroom units.
Denver and Austin, Texas, are leading the rental market recovery in U.S. tech hubs, with the median rent up 2.2% in Denver and 1.7% in Austin year-over-year. (See table below)
Smaller metros see double-digit rent growth; two-bedroom units surpass pre-COVID growth
Riverside (+15%) and Sacramento (+13.6%), Calif., led the nation in growth in April. Much of their success can be attributed to their relatively affordable median rental prices, of $1,950 and $1,704, respectively, when compared to neighboring Los Angeles and San Francisco. Both Memphis, Tenn. and Tampa, Fla., saw median rents grow by over 12%, compared to last year.
With working from home still very much a reality for many, space has been a priority for home buyers and renters alike, and that rise in demand has been reflected in home listing prices and now in rents for larger units. In April, two-bed units surpassed their pre-COVID growth rates, reaching a median of $1,662, up 5.2% year-over-year. In March 2020, two-bedroom rents were growing 3.5% year-over-year.
Studios, which tend to be more plentiful in larger, more expensive markets, are still seeing declines in rent. The median studio rent was down 1.9% year-over-year in April.
Tech Markets – Rent Overview
|Austin-Round Rock, Texas||$1,370||1.7%||$1,125||6.5%||1,261||3.9%||$1,550||5.1%|
|Los Angeles-Long Beach-Anaheim, Calif.||$2,500||-4.0%||$1,899||-7.1%||2,250||-4.5%||$2,975||-1.5%|
|New York-Newark-Jersey City, NY.-N.J.-Pa.||$2,350||0.0%||$1,995||-13.3%||2,200||0.2%||$2,695||7.8%|
|San Francisco-Oakland-Hayward, Calif.||$2,656||-10.9%||$2,065||-23.9%||2,450||-13.7%||$3,120||-7.8%|
|San Jose-Sunnyvale-Santa Clara, Calif||$2,695||-12.5%||$2,049||-14.4%||2,485||-12.0%||$3,071||-10.7%|
April 2021 Rental Data – 50 Largest Metropolitan Areas
|Metro||Median Rent||Rent Y/Y|
|Atlanta-Sandy Springs-Roswell, Ga.||$1,485||9.8%|
|Austin-Round Rock, Texas||$1,370||1.7%|
|Buffalo-Cheektowaga-Niagara Falls, N.Y.||$1,100||-0.9%|
|Dallas-Fort Worth-Arlington, Texas||$1,295||3.6%|
|Hartford-West Hartford-East Hartford, Conn.||$1,500||7.1%|
|Houston-The Woodlands-Sugar Land, Texas||$1,210||0.9%|
|Kansas City, Mo.-Kan.||$1,076||2.2%|
|Las Vegas-Henderson-Paradise, Nev.||$1,290||10.3%|
|Los Angeles-Long Beach-Anaheim, Calif.||$2,500||-4.0%|
|Louisville/Jefferson County, Ky.-Ind.||$995||7.1%|
|Miami-Fort Lauderdale-West Palm Beach, Fla.||$1,935||3.2%|
|Milwaukee-Waukesha-West Allis, Wis.||$1,330||-1.8%|
|Minneapolis-St. Paul-Bloomington, Minn.-Wis.||$1,439||-1.0%|
|New Orleans-Metairie, La.||$1,342||11.8%|
|New York-Newark-Jersey City, N.Y.-N.J.-Pa.||$2,350||0.0%|
|Oklahoma City, Okla.||$800||1.3%|
|Riverside-San Bernardino-Ontario, Calif.||$1,950||15.0%|
|San Antonio-New Braunfels, Texas||$1,079||4.4%|
|San Diego-Carlsbad, Calif.||$2,275||4.8%|
|San Francisco-Oakland-Hayward, Calif.||$2,656||-10.9%|
|San Jose-Sunnyvale-Santa Clara, Calif.||$2,695||-12.5%|
|St. Louis, Mo.-Ill.||$1,100||7.8%|
|Tampa-St. Petersburg-Clearwater, Fla.||$1,460||12.4%|
|Virginia Beach-Norfolk-Newport News, Va.-N.C.||$1,249||8.0%|