Rental Trends: How COVID and Rising House Prices Driven a Market Boom and Increased Interstate Migration

The combination of skyrocketing home prices and the increase in remote working that began during the COVID-19 pandemic has given the U.S. rental market a major face-lift, as many U.S. renters pack their bags and head to cheaper markets.

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Applicants for out-of-state rental properties increased 42% from 2020 to 2021, according to a new report from TransUnion. During the same period, rental inquiries in rural areas increased by 28%, while the volume of rental inquiries in urban areas increased by only 10%. Rising housing costs and a surge in remote working were likely the main contributors to these changes.

Interstate migration patterns show more people (and tenants) leaving the Rust Belt and the Northeast in favor of the South Atlantic and Mountain states, as well as Arizona and Texas.

The overall rental occupancy rate in the United States hit a record high of 98% in January 2022. The increase was partly due to an influx of Americans who sold their homes when housing prices were at record high and then decided to rent until valuations come down. Again.

An analysis of 2020-2021 rental applications found there was a 37% increase in applicants who sold their home in the past year and a 16% increase among applicants with a current mortgage. Classes.

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Much like the housing market, the U.S. rental market has been constrained by a lack of supply, with new units lagging behind demand due to supply chain bottlenecks, high material costs and a continuing labor shortage. This contributed to a 14% increase in the average rental price between 2020 and 2021.

At the same time, the median income of claimants only increased by 6% between 2020 and 2021, leading to an increase in arrears on rent payments. On-time rent payments fell to 92% at the end of 2021 from 96% in January 2020.

“While conditions have been exacerbated by migration patterns over the past two years, the rental market has struggled with a lack of supply since even before the pandemic,” said Maitri Johnson, vice president of selection. of tenants and employment at TransUnion, to GOBankingRates in an email. statement.

Although building permits are at their highest level in many years, supply chain issues have impacted new inventory, she added.

“This is one of the reasons why the ‘Build To Rent’ asset class is starting to emerge as a timely alternative/solution to add inventory in tight market conditions,” Johnson said.

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Meanwhile, immigrants are expected to help sustain the long-term rental market. More than 80% of immigrants who have been in the United States for five years or less are renters, TransUnion reported, citing data from the US Census Bureau and Harvard University’s Joint Centers for Housing Studies. Even after five years, the majority of immigrants are renting, including 70% of those who have been in the United States for five to 10 years and 57% of those who have been in the United States for 10 to 20 years.

“Because people who immigrate to the United States tend to remain tenants for long periods of time, there is likely a cumulative effect to this sustained increase,” Johnson said in a statement. “Current demand resulting from the housing market may decline as house prices fall, but this population will likely keep rental demand high for decades to come.”

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