Tech city rents soar again

From Broadway lights to bustling offices, big cities are back – and so are surging downtown rental prices. Following sharp declines during the pandemic, September data shows rents in the 10 biggest U.S. tech cities like Austin and New York surpassed March 2020 levels by an average of 6.3%, according to the Realtor.com® Monthly Rental Report released today. Nationally, rents grew at a double-digit annual pace (+13.6%) for the second month in a row.

“With rents continuing to surge to new highs nationwide, including in big tech hubs, September data confirms the U.S. rental market has moved past the recovery phase and is fully back in business. Rental demand remains unseasonably high, driven by still-limited housing supply, rising mortgage rates pushing buyers towards renting, and more people returning to big cities,” said George Ratiu, Manager of Economic Research for Realtor.com®. “At the same time, it’s important to put recent rental activity in the context of housing trends throughout the pandemic. Rents didn’t rebound from COVID declines as quickly as for-sale home prices, but rental activity has now reached a level not unlike the homebuying frenzy seen earlier this year, before fall seasonality kicked in. The good news is that if rents continue to parallel home listing prices, rental price growth could potentially begin cooling this winter.”

Rents surge in major urban tech hubs following steep pandemic declines

While big city rents dropped or stalled during the pandemic as people fled to less expensive and crowded areas, large urban rental markets began to rebound in April 2021 with the rollout of vaccines. However, rent growth in these major metros has found its stride over the past two months, with September data showing big city rents have not only recovered but are making up for lost time. In most counties at the heart of the nation’s 10 biggest tech cities, the September rental growth rate was higher than in March 2020, before the onset of COVID.

  • The average rent across the 10 biggest U.S. tech cities grew by 9.9% year-over-year in September and was 6.3% higher than in March 2020. For comparison, average big tech metro rents declined by as much as 7.2% at the height of the pandemic.
    • Some of the cities with September’s biggest annual rent gains, such as Austin (+22.3%) and Denver (+15.5%), did not necessarily experience the steepest COVID declines among big tech hubs during the pandemic.
    • However, rents are surging even in major metros that experienced some of the nation’s biggest COVID declines. For instance, Los Angeles rents were 8.1% higher in September compared to March 2020, bouncing back from declines of 12.3% at the city’s lowest point during the pandemic. 

“The days of rental deals in metros like San Francisco and Manhattan may be over, but there is a silver lining for renters with more flexible timelines. Big city rental competition and high prices is a sign of normalcy, which could precede more seasonal norms like winter cooling in rent growth in parts of the U.S.,” Raitu added. “For renters on tighter schedules, compromises will be key to staying on budget and not getting swept up in bidding wars. If location and size are your must-haves, consider deprioritizing extra amenities or upgrades.

Rental prices quicken their double digit pace

For the second consecutive month, national rents grew at a double-digit pace over last year and at a higher rate than in August. September’s rent growth was faster than in a typical year, but month-over-month has been getting smaller since the summer. This suggests a return to seasonality may be on the horizon for this coming December or January.

  • In September, the U.S. median rental price reached a new high of $1,654, up 13.6% year-over-year.
    • Annual rent growth in September was four-times faster than in March 2020 (+3.2%), before the onset of COVID.
    • National rents are now 15.5% ($222 per month) higher than in September 2019.
  • September’s national rent increase over 2020 was higher than in August (+11.5%), but month-over-month increases have been moderating from the feverish pace seen over the summer, up 3.2% from May to June.
    • In a typical pre-COVID year, rents have historically fluctuated by less than 1% on a monthly basis.
  • Nationally, all unit sizes tracked by Realtor.com® saw double-digit rent growth and reached new rental price highs in September. COVID demand for more space continues to drive the highest price growth among larger units, led by two-bedrooms at a yearly increase of 14.4% to $1,855.
    • One-bedroom units also saw a sizable rental price increase (+13.7% year-over-year) to $1,542 in September.
    • For the first time in 2021, studio rent growth hit double-digits, up 11.3% over last year to a median of $1,351 per month. 
  • Rents grew by double-digits in more than half (31) of the 50 largest U.S. markets in September, led by secondary metros like Tampa (+33.3%).
    • Seven metros posted yearly rent gains of at least 25%; in addition to Tampa, these were: Miami (+31.6%), Riverside, Calif. (+26.5%), Phoenix (+26.4%), Las Vegas (+25.9%), Austin (+25.3%) and San Diego (+25.1%).
Realtor.com® September 2021 Rental Data – 10 Biggest U.S. Tech Hubs
MetroPre-
COVID
Rent (Mar
2020)
COVID
Low
Month
COVID
Low Rent
COVID Low
vs. March
2020
Sept. 2021
Rent
Sept. 2021
Rent YoY
Sept 2021
vs. COVID
Low
Sept. 2021
vs. March
2020
Austin, Texas$1,367Oct-20$1,300-4.9%$1,64725.3%26.7%20.5%
Boston, Mass.$1,680Dec-20$1,600-4.8%$1,8953.4%18.4%12.8%
Chicago, Ill.$2,300Apr-21$2,3502.2%$2,5002.7%6.4%8.7%
Denver, Colo.$2,635Feb-21$2,488-5.6%$2,85015.5%14.5%8.2%
Los Angeles, Calif.$1,938Dec-20$1,700-12.3%$2,09513.8%23.2%8.1%
New York, N.Y.$1,976Dec-20$1,836-7.1%$2,075-3.8%13.0%5.0%
San Francisco, Calif.$1,650Dec-20$1,593-3.5%$1,6955.5%6.4%2.7%
San Jose, Calif.$2,480Jan-21$2,242-9.6%$2,51710.8%12.3%1.5%
Seattle, Wash.$2,923Jan-21$2,610-10.7%$2,89516.7%10.9%-1.0%
Washington, D.C.$3,127Dec-20$2,645-15.4%$3,0159.2%14.0%-3.6%
 
Realtor.com® September 2021 Rental Data – 50 Largest Metropolitan Areas
MetroOverall
Rent
Overall
Rent YY
Studio
Rent
Studio
Rent
YoY
1br
Rent
1br Rent
YY
2br
Rent
2br Rent
YY
Atlanta-Sandy Springs-Roswell, Ga.$1,72022.3%$1,59116.9%$1,61823.1%$1,87822.3%
Austin-Round Rock, Texas$1,64725.3%$1,31521.2%$1,52326.7%$1,83526.1%
Baltimore-Columbia-Towson, Md.$1,70111.0%$1,49519.7%$1,61510.6%$1,8099.6%
Birmingham-Hoover, Ala.$1,11514.4%$1,05612.9%$1,07012.8%$1,17518.1%
Boston-Cambridge-Newton, Mass.-N.H.$2,5173.4%$2,1956.6%$2,4005.5%$2,7750.9%
Buffalo-Cheektowaga-Niagara Falls, N.Y.$1,21313.9%$7950.6%$1,0758.0%$1,39018.8%
Charlotte-Concord-Gastonia, N.C.-S.C.$1,54320.5%$1,40222.4%$1,42019.1%$1,68518.4%
Chicago-Naperville-Elgin, Ill.-Ind.-Wis.$1,6952.7%$1,150-14.8%$1,6503.1%$1,9502.6%
Cincinnati, Ohio-Ky.-Ind.$1,20012.7%$1,07712.8%$1,14311.5%$1,2758.5%
Cleveland-Elyria, Ohio$1,1408.6%$8004.0%$1,0818.5%$1,23510.3%
Columbus, Ohio$1,18512.5%$99913.7%$1,11813.5%$1,28212.3%
Dallas-Fort Worth-Arlington, Texas$1,47518.2%$1,26920.9%$1,35720.6%$1,76522.6%
Denver-Aurora-Lakewood, Colo.$1,89515.5%$1,59016.0%$1,77117.1%$2,18416.3%
Detroit-Warren-Dearborn, Mich.$1,2257.6%$99511.2%$1,0608.9%$1,3757.0%
Hartford-West Hartford-East Hartford, Conn.$1,5507.6%$1,2206.1%$1,4454.4%$1,7509.4%
Houston-The Woodlands-Sugar Land, Texas$1,3199.9%$1,27513.7%$1,20911.1%$1,4859.6%
Indianapolis-Carmel-Anderson, IN$1,16813.4%$1,0059.2%$1,08412.8%$1,30918.6%
Jacksonville, Fla.$1,44623.7%$1,13038.1%$1,35928.3%$1,59528.0%
Kansas City, Mo.-Kan.$1,1507.3%$9202.8%$1,0436.0%$1,3508.0%
Las Vegas-Henderson-Paradise, Nev.$1,54825.9%$92515.6%$1,42227.0%$1,69527.0%
Los Angeles-Long Beach-Anaheim, Calif.$2,85013.8%$2,12210.5%$2,60014.0%$3,39513.9%
Louisville/Jefferson County, Ky.-Ind.$1,0358.9%$8902.9%$9805.4%$1,16417.3%
Memphis, Tenn.-Miss.-Ark.$1,21722.9%$1,1009.5%$1,19524.5%$1,27525.4%
Miami-Fort Lauderdale-West Palm Beach, Fla.$2,50031.6%$1,97227.2%$2,20029.4%$2,89428.6%
Milwaukee-Waukesha-West Allis, Wis.$1,4176.1%$1,1002.8%$1,3154.0%$1,66010.7%
Minneapolis-St. Paul-Bloomington, Minn.-Wis.$1,5104.1%$1,2000.4%$1,4364.4%$1,8357.9%
Nashville-Davidson-Murfreesboro-Franklin, Tenn.$1,57620.1%$1,55513.5%$1,51722.0%$1,62017.5%
New Orleans-Metairie, La.$1,3500.0%$975-2.5%$1,3000.1%$1,5504.0%
New York-Newark-Jersey City, N.Y.-N.J.-Pa.$2,500-3.8%$2,250-2.1%$2,300-8.0%$2,840-2.1%
Oklahoma City, Okla.$8506.4%$7000.4%$7607.0%$8994.5%
Orlando-Kissimmee-Sanford, Fla.$1,65524.5%$1,45023.9%$1,55026.0%$1,85530.5%
Philadelphia-Camden-Wilmington, Pa.-N.J.-Del-Md.$1,6493.4%$1,2750.8%$1,5803.3%$1,8503.9%
Phoenix-Mesa-Scottsdale, Ariz.$1,70026.4%$1,28432.5%$1,53028.0%$1,89926.6%
Pittsburgh, Pa.$1,41511.6%$1,22015.6%$1,37613.7%$1,56013.5%
Portland-Vancouver-Hillsboro, Ore.-Wash.$1,71014.1%$1,3957.4%$1,65613.4%$1,93017.0%
Providence-Warwick, R.I.-Mass.$1,7958.8%$1,410-7.5%$1,6004.2%$1,99013.2%
Raleigh, N.C.$1,50022.4%$1,37622.5%$1,39023.7%$1,66023.9%
Richmond, Va.$1,29915.8%$1,08513.0%$1,17315.0%$1,45415.8%
Riverside-San Bernardino-Ontario, Calif.$2,24526.5%$1,36510.5%$1,90523.7%$2,55031.8%
Rochester, N.Y.$1,2004.3%$8754.0%$1,1004.1%$1,3255.6%
Sacramento-Roseville-Arden-Arcade, Calif.$1,92020.4%$1,70816.8%$1,80021.6%$2,04520.4%
San Antonio-New Braunfels, Texas$1,20613.9%$1,03912.4%$1,13017.8%$1,39016.9%
San Diego-Carlsbad, Calif.$2,74525.1%$2,12916.3%$2,53927.9%$3,08023.4%
San Francisco-Oakland-Hayward, Calif.$2,8955.5%$2,3957.0%$2,7005.5%$3,3703.1%
San Jose-Sunnyvale-Santa Clara, Calif.$3,01510.8%$2,43119.8%$2,78912.6%$3,3959.6%
Seattle-Tacoma-Bellevue, Wash.$2,09516.7%$1,67512.8%$2,09718.1%$2,37513.0%
St. Louis, Mo.-Ill.$1,1506.0%$9344.9%$1,1159.2%$1,2256.1%
Tampa-St. Petersburg-Clearwater, Fla.$1,80033.3%$1,61237.4%$1,67339.4%$2,00034.2%
Virginia Beach-Norfolk-Newport News, Va.-N.C.$1,36514.2%$1,1457.0%$1,32413.5%$1,45516.4%
Washington-Arlington-Alexandria, D.C.-Va.-Md.-W.V.$2,0759.2%$1,6804.9%$1,9918.5%$2,4009.3%

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