Surging home prices have put buying a home out of reach for many people, and now that rental prices are at their highest in two years, people may be getting pushed out of that market, too.
In 50 of the largest metropolitan areas in the country, median June rental prices rose 8.1% year- over-year to $1,575 per month, which means renters are paying an additional $118 each month, Realtor.com said on Thursday. Since 2019, the last pre-pandemic year, June median rents have increased by 10.4%, or $149. In the 50 areas Realtor.com looked at, 44 recorded their highest median rental prices ever. As the chart below shows, rents typically fluctuate less than 1% per month, but in May and June of this year, prices rose 3.0% and 3.2%, respectively, from their prior months.
A number of things are driving up rental prices, including a historically low number of vacancies, increasing vaccination rates that are making people more comfortable with moving again, and demand from those opting to rent as buying a home becomes less affordable. But with rents soaring now, renter advocates stressed the urgent need for more affordable housing.
The National Low Income Housing Coalition estimated this week in its annual “Out of Reach” report that a full-time worker must earn at least $20.40 per hour in 2021 to rent a modest one-bedroom home, or $24.90 per hour to rent a modest two-bedroom home. That is up from $19.56 per hour and $23.96 per hour, respectively, the prior year.
The federal minimum wage is far less than that, $7.25 per hour. And the average renter’s hourly wage of $18.78 is still $1.62 less than the amount needed to afford a one-bedroom home and $6.12 less than required for a two-bedroom home, the coalition said.
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