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Current state of rent prices in the US for late summer 2022 - and beyond
Rent prices nationwide spiked in August 2022, compared to the same time last year, with the average monthly price of a 1-bedroom at $1,769. Rent.com researcher Jon Leckie shares more on the current rental market.
How much does it cost to rent a one-bedroom or two-bedroom apartment in the United States? Nationwide rent prices have skyrocketed in the two years since the COVID-19 pandemic, and the cost for renters remains high in August.
"Rent prices are definitely up, and up pretty significantly," Rent.com researcher Jon Leckie told FOX Television Stations this week.
The average cost of a one-bedroom in August 2022 is $1,769, a 39% increase from this time last year, according to Rent.com’s monthly report.
Meanwhile, the nationwide average monthly cost for a two-bedroom rental in August is $2,105, a 38% increase from a year ago.
Rents have increased along with rising home prices, Leckie said. As more find themselves priced out of home buying, there’s more upward pressure on the rental market.
"I think what we’re seeing is a peak in the housing market where people are saying, ‘It’s too expensive, I can’t afford it. Mortgage rates are too uncertain,’ and so they are either remaining renters, or they’re selling now and high but they decided they don’t want to buy until the market kind of stabilizes or comes down," Leckie explained.
What are the most expensive cities for renters?
While the average nationwide rent prices are up, not all U.S. regions are divided equally when it comes to high rents. The majority of the cities with the highest rent (58%) are on the West Coast, according to a separate report from Rent.com showing the top 100 most expensive cities for renters.
Out of the top 100 U.S. cities, 41% are in California. Another 28% of the most expensive cities for renters are in the South — and a majority of the southern cities (57%) are in Florida. Several are also in or near major technology hubs, keeping rents high and apartments in low supply due to the industry’s high salaries and consistent growth during the pandemic, according to the report.
The Northeast had just 13% of the 100 cities with the highest rent in the U.S., including Bayonne, New Jersey, Boston, Cambridge, and Quincy, Massachusetts.
Only one Midwest city made the top 100 list for expensive rent: Chicago (No. 46 – $2,904 on average).
Jersey City, New Jersey, which is located across the Hudson River from Manhattan, ranked as the No. 1 city for the highest rent in the United States during the survey period (Manhattan was excluded from Rent.com’s ranking). The average monthly rent in Jersey City increased from $3,308 in 2021 to $5,500 in 2022, according to the report — which is an increase of 66.25%.
Boston ranked second with the average rental rate jumping from $4,164 in 2021 to $4,878 in 2022 — a 17.14% annual rent increase.
The California cities of Palo Alto ($4,672), Glendale ($4,472), and Santa Monica ($4,357) rounded out the top five.
On the opposite end, here are the top 10 U.S. cities identified as having the cheapest average rent:
A map shows the top 10 U.S. cities identified as having the cheapest average monthly rent as of June 2022. Only cities with populations of 50,000 or higher were included. (Credit: FOX Television Stations)
You need to make how much?! Low-wage workers priced out of housing
Meanwhile, a recently-published report by the National Low Income Housing Coalition (NLIHC), a housing advocacy group, reveals the disparity between low-income hourly wages, and the cost of an average two-bedroom rental in all 50 states.
The 2022 "Out of Reach" report shares an estimate of the hourly wage a full-time worker must earn to afford a rental home, without spending more than 30% of their income, called a "Housing Wage." It also uses the U.S. Department of Housing and Urban Development’s fair market rent, which is an estimate of what a person moving today can expect to pay for a modestly priced rental home.
In 2022, the report states that a full-time worker must earn $25.82 per hour to afford a modest two-bedroom rental home, under the noted factors. It adds that to afford a modest one-bedroom rental home — without spending more than 30% of their income — they must earn $21.25 per hour.
"The federal minimum wage of $7.25 per hour falls well-short of both the two-bedroom and one-bedroom national Housing Wages. The two-bedroom Housing Wage is over 3.5 times greater than the federal minimum wage of $7.25," the report states.
There is no state, metropolitan area, or county in the U.S. where a worker earning the federal minimum wage — or prevailing state or local minimum wage — can afford a modest two-bedroom rental home at HUD’s fair market rent by working a standard 40-hour work week, according to the report.
Furthermore, these workers cannot afford a modest one-bedroom apartment in 91% of U.S. counties, the report adds.
RELATED: This is how much money you need to make per hour to afford rent in California
When will the US rental market level off?
FILE IMAGE - A "for rent" sign is posted in front of an apartment building on June 2, 2021, in San Francisco, California. (Photo by Justin Sullivan/Getty Images)
At the onset of the pandemic, the rental market took a hit. Prices remained low until about August 2021, when "we started to see a steep rise" in many parts of the country, Leckie explained.
"I think we’re starting to kind of level off," Leckie said, speaking on Thursday to FOX Television Stations. "We’re hoping that in the near future, maybe end of the summer, kind of early fall, you’ll start seeing prices start to moderate where these year-over-year changes won’t be as extreme."
"Your base level prices will be higher than they were before, but the changes between year to year will hopefully be a little less," he added.
This story was reported from Cincinnati.