For years, Americans consistently flocked to downtowns, eager to take advantage of the walkability, nightlife, and activities offered in more urban locations. That all changed during the pandemic, though, as many white-collar jobs went remote and workers looked for more space.
But what began as a pandemic trend has become a much bigger shift in America's housing preference, causing suburban rents to soar.
The latest data from Apartment List, as reported by The Wall Street Journal, shows that between March 2020 (when the World Health Organization officially declared COVID-19 a pandemic) to July 2023, suburban rent prices spiked 25.8% compared to urban rent price increases of 17.8%.
The ‘burbs are bustling
While there are still a few cities where rent growth in urban areas is outpacing the suburbs — including Tampa and New York City — Apartment List's research shows that in 28 out of 33 metro areas, the suburbs are experiencing the most significant rent increases.
The Atlanta area is a good example of how pricey the suburbs are becoming. Median rent in July 2023 was $1,529 in Atlanta's urban core, compared to a median price of $1,677 in Sandy Springs, a suburb of the city.
Not only has the influx of people moving to suburbs caused rents to increase quickly, but higher house prices and soaring mortgage rates have kept people in rentals rather than buying homes.
A National Association of Homebuilders report from the spring showed 96.5 million households — about 73% of U.S. households — couldn't afford a median-priced home of $425,768. Home prices have come down only slightly since then, to $416,100, but it hasn't been enough. Housing affordability is still at its worst in 40 years.
How to help bring your rental costs down
A recent Harvard report showed that 21.6 million households spend more than 30% of their pre-tax income on rent. And with rental prices elevated, you may need to make some changes to help keep your personal finances on track. Here are a few suggestions:
- Consider a roommate: This is probably one of the best ways to deal with high rent costs. U.S. Census Bureau data shows that more than one-quarter of households have just one person. If you have the space, taking on a roommate could help you cut your rent costs in half.
- Negotiate your rent: I've rented homes where I negotiated the monthly rent down or asked for a month-to-month lease rather than a year-long commitment. There's no guarantee you'll get what you want, but if you're reasonable with your request and have a good rental record, you may be able to lower your monthly costs or get more favorable rental terms.
- Evaluate your needs: It can be hard to do, but it may be worth asking yourself whether you need to live in the area you want to live in or if you need all the space you have. Maybe you've already made a lot of sacrifices and can't compromise any further. But with luxury rental construction spiking over the past few years, some renters may be in apartments that are just a bit too nice and too pricey.
The good news is that there may be some rental relief on the way soon. Apartment vacancies have increased for the past 22 consecutive months, Apartment List says. When vacancies increase, rental companies typically lower prices to spur more demand. Last month, apartment vacancies reached 6.4%, higher than pre-pandemic levels.
While that may not help your situation right now, more vacancies could help lower rental costs soon. Like any other financial decision, it's worth taking some time to evaluate what you're currently doing and see if there are any changes you can make to improve your current financial situation.
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