The Big Cool Begins For Formerly Hot U.S. Pandemic Cities

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Simple math will tell you that rising home mortgage rates plus a lack of inventory causing home seekers to flock to rental properties are, in most cases, the cause of rising rents across the country. But there may be some relief coming, depending on the market you live in. 

“Since the pandemic, year one was tough for renters because of sheltering in place and stagnant occupancy, but then things got super hot,” Zumper CEO Anthemos Georgiades told Benzinga. “We saw occupancy spike to 98% in 2021 and 2022, and now we are seeing the market whiplash down again.” 

Zumper, a real estate platform used by investors and renters, has just released its National Rent Report for January 2023. The company found that rent hikes are slowly decelerating, with a national index for one-bedroom rentals falling by 0.3% in January to $1,492. Two bedrooms remained flat at $1,822.

“Rentals are a great barometer for the economy because people are now spending a third of their income on rent,” he said, noting that home buyers aren’t the only ones dealing with inventory issues. “We’ve been there for decades and have been chronically undersupplied on rental inventory with underinvestment, regulation and zoning blocking any new construction.”

Zumper’s January report also found that some cities people flocked to during the pandemic and that drastically raised rates are plummeting now. Except for Scottsdale, rents in every major city in Arizona were down month over month. In Florida, every major city is down except for Tallahassee, which was flat. Nashville, Tennessee, continues to be an exception, with one-bedroom month-over-month increases of 6.2% spurred by an influx of residents, a healthy job market and favorable tax laws for businesses and individuals. 

New York City continues to be the most expensive market in the country by $650 ($3,690) per month over the No. 2 city — Boston — for a one-bedroom apartment. But formerly high-priced markets, popular with those looking for better weather and lifestyle, which Georgiades refers to as “Zoom towns” (those popular for remote workers), are now dropping. 

“Everyone was writing about Boise and Phoenix and what hot rental markets they became in 2021. Those markets exploded,” Goergiades said. “But now those same rental markets are falling month to month. Basically, people who moved there didn’t stick the landing.”

The Zumper National Rent Report analyzes rental data from over 1 million active listings across the country and then aggregated on a monthly basis to calculate median asking rents for the top 100 cities in the U.S. by population.

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