Rent Prices Soar Beyond Pre-Pandemic Projections

Rhea-AI Summary

Zillow's latest market report reveals a significant recovery in U.S. rents and home values as of July 2021. Typical monthly rents reached $1,843, marking a 9.2% year-over-year increase. Home values also surged, with a national average of $298,933 (up 16.7% year-over-year). Despite record highs, the report suggests a potential rebalancing in the housing market with a 4.5% increase in inventory, indicating easing price pressures. However, affordability challenges may arise as demand continues to outpace income growth. Key metropolitan areas like Tampa and Phoenix reported the highest rent growth, while coastal cities lagged behind.

Positive

• Typical monthly rents rose to $1,843, a 9.2% increase YoY.
• Home values increased by 16.7% YoY, reaching an average of $298,933.
• Inventory of available homes for sale rose by 4.5% MoM, marking the third consecutive month of growth.
• Cities like Tampa (15.6% higher) and Phoenix (23.1% higher) showed significant rent increases.

Negative

• Affordability challenges may grow as demand outpaces income increases.
• 22 of the 50 largest metros experienced slower monthly growth than in June.
• Share of listings with price cuts rose to 10.4%, indicating potential market softness.

SEATTLE, Aug. 19, 2021 /PRNewswire/ -- A strong and widespread recovery of rents has pushed prices beyond where they would have been had the coronavirus pandemic never occurred, according to Zillow's® latest market report¹. Although U.S. home appreciation again broke records in July, there are signs of a rebalancing in the for-sale market to come, with inventory rising for the third consecutive month and home value appreciation slowing in nearly half the major markets. 

Rent growth continued to build on momentum that began in March, following a period of sluggishness that started with the COVID-19 outbreak in 2020. Nationally, typical monthly rents rose to $1,843 in July, surpassing June's record appreciation and rising 9.2%, or $156, above July 2020.  

"With the economy continuing to reopen, employees receiving more long-term guidance on remote work, and as students find their way back to college campuses, the rental market is picking back up," said Nicole Bachaud, Zillow economic data analyst. "As high demand puts pressure on rents and incomes are unable to keep up, affordability will become more of a challenge in the coming months."

Zillow estimates rents are now $52 higher than they would have been if the past 18 months had been more normal. Rents first surpassed their pre-pandemic trajectory last month.

Rents in nine major metropolitan areas, all across the Sun Belt, are at least 10% higher than would have been expected based on pre-pandemic trends, topping out at 15.6% higher in Tampa. Rents in just nine metros are lower than projected, and nearly all are expensive coastal markets: Los Angeles; Washington, D.C.; Chicago; Minneapolis; Seattle; Boston; New York; San Francisco; and San Jose. 

The top 14 metros for annual rent growth are scattered across the Sun Belt, led by Phoenix, up 23.1%, Las Vegas (22.7%), Tampa (21.4%) and Riverside (19.9%). July rents are also positive year over year in all major metros, with holdouts New York, San Francisco and San Jose finally posting yearly growth.

Available for-sale inventory took another encouraging step forward in July, rising 4.5% over June to mark the third consecutive month of rising supply. The improvement is widespread; inventory rose month over month in all but three of the 50 largest U.S. metros. Some of the largest additions of supply came to in-demand metros -- Cleveland, Buffalo, Columbus, Denver and Austin. While housing supply is still nearly 28% below July 2020 levels, further injections will help reduce competition and slow extreme price growth. 

Home value growth again broke monthly and annual records, with year-over-year appreciation of 16.7% and monthly gains of 2%. This brings typical home values measured by Zillow's Home Value Index (ZHVI) to $298,933, up nearly $43,000 over last July. Austin again tops the charts with year-over-year growth landing at 41.5%, significantly higher than New Orleans' 11.6% year-over-year growth at the bottom of the pack.

The end of rampant price hikes may be on the horizon, however, as 22 of the nation's 50 largest metros had slower monthly growth than in June. The share of listings with a price cut rose 1.7% in July to 10.4%, and median time on market rose or stayed steady in all but three major metros. 

"All signs point to the likelihood that the housing market is beginning to ease off the gas pedal," said Bachaud. 

Metropolitan Area*	Zillow Home Value Index (ZHVI)	ZHVI – YoY Change	Zillow Observed Rent Index (ZORI)	ZORI – YoY Change	ZORI – MoM Change	Inventory – MoM Change
United States	$298,933	16.7%	$1,843	9.2%	1.9%	4.5%
New York, NY	$552,607	13.3%	$2,671	1.7%	2.3%	2.4%
Los Angeles–Long Beach–Anaheim, CA	$831,593	19.3%	$2,553	6.9%	1.7%	2.8%
Chicago, IL	$280,130	13.4%	$1,746	3.5%	1.0%	5.4%
Dallas–Fort Worth, TX	$313,393	19.4%	$1,642	12.4%	2.4%	4.5%
Philadelphia, PA	$302,822	16.9%	$1,710	6.1%	1.0%	4.8%
Houston, TX	$258,174	15.0%	$1,504	8.8%	1.9%	3.3%
Washington, D.C.	$512,936	14.2%	$2,107	3.8%	1.6%	5.3%
Miami–Fort Lauderdale, FL	$355,793	14.7%	$2,249	17.1%	3.2%	-4.0%
Atlanta, GA	$301,104	19.6%	$1,787	17.6%	2.9%	2.5%
Boston, MA	$592,940	16.7%	$2,557	2.7%	1.1%	-0.3%
San Francisco, CA	$1,324,433	17.8%	$3,082	0.9%	1.6%	3.4%
Detroit, MI	$220,309	17.8%	$1,387	10.5%	1.5%	10.2%
Riverside, CA	$495,619	25.1%	$2,358	19.9%	2.5%	6.0%
Phoenix, AZ	$390,733	29.8%	$1,746	23.1%	3.2%	1.6%
Seattle, WA	$670,473	22.7%	$2,125	6.2%	2.4%	4.6%
Minneapolis–St. Paul, MN	$347,512	14.0%	$1,605	4.1%	0.6%	6.3%
San Diego, CA	$792,531	26.0%	$2,577	11.9%	2.3%	5.7%
St. Louis, MO	$216,727	15.9%	$1,224	8.1%	1.4%	4.9%
Tampa, FL	$295,532	23.7%	$1,819	21.4%	3.8%	2.4%
Baltimore, MD	$345,194	13.8%	$1,749	9.9%	1.8%	6.0%
Denver, CO	$554,544	20.4%	$1,872	10.2%	2.2%	8.1%
Pittsburgh, PA	$196,897	19.1%	$1,247	4.8%	0.1%	7.1%
Portland, OR	$515,049	19.1%	$1,753	8.9%	1.7%	6.5%
Charlotte, NC	$303,816	20.5%	$1,628	13.6%	2.1%	4.9%
Sacramento, CA	$540,438	23.6%	$2,142	14.2%	2.6%
San Antonio, TX	$250,108	17.0%	$1,344	11.0%	2.7%	1.6%
Orlando, FL	$307,048	14.2%	$1,758	14.2%	3.0%	1.9%
Cincinnati, OH	$228,977	16.5%	$1,339	9.0%	1.1%	7.7%
Cleveland, OH	$195,514	18.2%	$1,278	8.8%	1.3%	11.1%
Kansas City, MO	$250,881	18.0%	$1,304	8.2%	1.0%	7.2%
Las Vegas, NV	$360,345	21.5%	$1,662	22.7%	3.6%	5.6%
Columbus, OH	$258,420	16.1%	$1,366	8.8%	1.9%	9.6%
Indianapolis, IN	$226,634	16.9%	$1,375	11.5%	1.4%	5.9%
San Jose, CA	$1,462,949	19.6%	$3,068	0.6%	1.6%	0.2%
Austin, TX	$496,659	41.5%	$1,695	16.8%	4.1%	7.3%
Virginia Beach, VA	$285,199	13.0%	$1,496	13.5%	2.3%	3.4%
Nashville, TN	$347,050	16.3%	$1,724	11.3%	2.4%
Providence, RI	$396,502	20.2%	$1,735	13.1%	1.5%	7.0%
Milwaukee, WI	$247,952	17.2%	$1,206	5.6%	0.4%	15.7%
Jacksonville, FL	$287,139	19.5%	$1,597	18.5%	3.4%	2.7%
Memphis, TN	$192,043	16.6%	$1,504	15.1%	0.9%	6.8%
Oklahoma City, OK	$185,328	12.2%	$1,210	10.4%	1.4%	8.4%
Louisville–Jefferson County, KY	$214,379	13.8%	$1,169	6.4%	1.5%	8.1%
Hartford, CT	$288,772	17.6%	$1,587	9.8%	1.0%	4.2%
Richmond, VA	$289,731	12.9%	$1,429	10.8%	1.6%	4.3%
New Orleans, LA	$239,869	11.6%	$1,316	7.3%	1.9%	5.1%
Buffalo, NY	$221,880	23.7%	$1,225	9.2%	1.7%	10.2%
Raleigh, NC	$353,248	20.3%	$1,600	14.0%	3.0%	-2.9%
Birmingham, AL	$204,114	14.0%	$1,271	9.0%	2.1%	1.2%
Salt Lake City, UT	$510,010	26.3%	$1,547	13.5%	1.0%	4.6%

*Table ordered by market size

¹ The Zillow Real Estate Market Reports are monthly overviews of the national and local real estate markets. The reports are compiled by Zillow Real Estate Research. For more information, visit www.zillow.com/research. The data in the Zillow Real Estate Market Reports is aggregated from public sources by a number of data providers for 928 metropolitan and micropolitan areas, dating back to 1996. Mortgage and home loan data is typically recorded in each county and publicly available through a county recorder's office. All current monthly data at the national, state, metro, city, ZIP code and neighborhood levels can be accessed at www.zillow.com/research/data.

About Zillow Group

Zillow Group, Inc. (NASDAQ: Z and ZG) is reimagining real estate to make it easier to unlock life's next chapter. 

As the most visited real estate website in the United States, Zillow® and its affiliates offer customers an on-demand experience for selling, buying, renting or financing with transparency and nearly seamless end-to-end service. Zillow Offers® buys and sells homes directly in dozens of markets across the country, allowing sellers control over their timeline. Zillow Home Loans™, our affiliate lender, provides our customers with an easy option to get pre-approved and secure financing for their next home purchase. Zillow recently launched Zillow Homes, Inc., a licensed brokerage entity, to streamline Zillow Offers transactions.  

Zillow Group's brands, affiliates and subsidiaries include Zillow®; Zillow Offers®; Zillow Premier Agent®; Zillow Home Loans™; Zillow Closing Services™; Zillow Homes, Inc.; Trulia®; Out East®; StreetEasy®; and HotPads®. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org).

 

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SOURCE Zillow

FAQ

What is the current average rent in the U.S. according to Zillow?

As of July 2021, the average rent in the U.S. is $1,843.

How much have home values risen nationwide as reported by Zillow?

Home values have increased by 16.7% year-over-year, reaching an average of $298,933.

Which metropolitan area showed the highest rent growth according to Zillow?

Phoenix reported the highest rent growth at 23.1% year-over-year.

What trend is observed in the housing inventory in July 2021?

Housing inventory rose by 4.5% month-over-month, the third consecutive month of increases.

Are there any signs of slowing in the housing market?

Yes, 22 of the 50 largest metros had slower monthly growth than in June, indicating potential market softening.