Suburban Rental Edge Shrinks By 52.9 Percent Over Three Years

It used to be that those looking to rent could find a better ROI out in the ’burbs. However, new data out from Avail and realtor.com indicates that this advantage has quickly shrunk over the course of the pandemic, especially as rental prices hit new national highs.

The latest Monthly Rental Report found that the U.S. median rental price hit its latest all-time high in July at $1,879 per month. That represents a 12.3 percent annual increase and a 23.3 percent increase from July 2020.

The rental price advantage of living in the suburbs compared to urban areas has shrunk by 52.9 percent vs the same time period three years ago (aka pre-pandemic).

“Whether in a downtown area or suburb, staying put or making a change, renters are stuck between a rock and a hard place when it comes to affordability. Compared to three years ago when rental price premiums were typically concentrated in urban hubs, renting is now nearly as expensive in the suburbs, where the rise in remote work has driven a surge in demand,” said realtor.com Chief Economist Danielle Hale. “At the same time, the days of smaller premiums for downtown rentals are numbered, as a return to in-office work and city life is sparking a relative uptick in urban rent growth. Put simply, renters are feeling it everywhere, but there may be some relief ahead. Survey findings suggest that landlords are adjusting their approaches to renters’ tightening budgets, while July data shows rent growth is leveling off at a relatively cooler pace than in 2021.”

While rents continue to rise, it is worth noting that July’s median rental price only increased by $3 over June as rent growth year-over-year continued moderating to its slowest pace since August 2021. Nationally, July’s annual rent growth was slightly faster in urban areas, up 12.8 percent to a median $1,927.5, than in suburban areas, up 11.7 percent to a median $1,821. Most significantly, rents in New York were up 25.4 percent year-over-year, followed by Chicago, Boston and Miami.

On average, renters saw a $160 per month increase in rent when renewing leases this year and a $300 per month increase when signing a new lease, according to the survey.