Here’s where U.S. rents are rising — and falling — the fastest

Many major U.S. cities have seen apartment prices soar in the past year, even as the typical American has seen pandemic-era rent inflation fall sharply.

For example, renters in Syracuse, New York saw monthly rents for one- and two-bedroom apartments on the market jump more relative to other major cities: by 29% and 25%, respectively, as of June 2023, according to data from Zumper’s National Rent Report.

Zumper analyzed the average rental demand for apartment listings in the 100 largest US cities by population.

Rents are also up at least 10% for one- and two-bedroom apartments in other major metros: Lincoln, Nebraska; Chicago; Buffalo, New York; Madison, Wisconsin? Rochester, New York; and New York, according to Zumper.

Instead, renters in other cities are seeing relief.

Asking rents for one-bedroom apartments have dropped at least 5% in Oakland, California. Memphis and Chattanooga, Tennessee? Cincinnati, Ohio? Colorado Springs, Colorado; Irving, Texas? Jacksonville, Florida? and Raleigh, Greensboro and Durham, North Carolina, according to the analysis.

By comparison, national prices overall for one- and two-bedroom apartments are up 1.5 percent and 2.1 percent, respectively, from June 2023, Zumper found.

New York is the most expensive metro area for renters: The typical renter pays $4,300 a month for a one-bedroom apartment, it found.

By comparison, in Akron, Ohio, and Wichita, Kansas — which tied for the lowest rents in major cities — renters pay $730 a month for a one-bedroom apartment.

At a high level, rent inflation is driven by supply and demand dynamics, said Crystal Chen, the analyst who compiled the Zumper analysis.

Basically, areas with rapidly rising rents are seeing demand outpace the supply of available apartments, while those with falling rents have seen their apartment inventories increase.

For example, the vacancy rate in New York recently fell to 1.4%, a record low dating back to the 1960s, according to the New York City Department of Housing Preservation and Development. The vacancy rate has “fallen” from 4.5% just two years ago, the agency said.

More from Personal Finance:
The typical new home in the US is shrinking
Why inflation continues to upend retirement plans
These are the least difficult areas in the US to buy a home

“The data is clear, the demand to live in our city far outstrips our ability to build housing,” New York City Mayor Eric Adams said in a statement about the vacancy rate.

Inflating rents can create financial challenges for households.

In May, typical tenant would have spent nearly 30% of their income from a new rental, according to Zillow.

While that’s down from a recent peak of near 31 percent in June 2022, it’s above the roughly 28 percent that was common before the pandemic, according to Zillow data.

About 86% of New Yorkers with the lowest income (less than $25,000 a year) are severely overburdened by rent, according to the New York City Department of Housing Preservation and Development. The increase in financial pressure has caused “an alarming increase in rent non-payments and arrears” over 2021, it said.

High rents can have other cascading effects.

For example, they can limit capacity of prospective homebuyers to save for a down payment, “keeping them on the sidelines of the housing market,” Fitch said in a global housing outlook.

Rent inflation plummeted in the early days of the Covid-19 pandemic.

“Almost everyone” was sheltered in place during the health crisis, and digital nomads who no longer needed to work in a physical office left cities for suburbs and outdoor spaces, Chen said.

But rents rose from 2022 to 2023 amid back-to-office policies and as people moved back to bigger cities, Chen said.

Annual rent inflation to a large extent hovered between 3% and 4% in the years before the pandemic and peaked at about 9% in early 2023, according to the consumer price index. It has since gradually declined, to around 5% in May, according to consumer price index data.