Woman on the phone

In the US Market, Renting is Just As Hard As Buying Right Now

Record Jump In Rents During 2021

The red-hot US housing market shows no signs of cooling even though other assets like stocks and cryptocurrencies have faced losses to start the year. Analysts attribute this to ongoing pandemic-related trends in the real estate sector. More people are working remotely and choosing to move from coastal cities to Sun Belt states.

Additionally, with mortgage rates set to rise, many home buyers are rushing to get deals done. Meanwhile, the number of homes for sale is still low — active housing inventory is down 28% year-over-year as of late January.

These combined factors aren’t just impacting home purchase prices. They’re also driving rent higher for many people. CareLogic reports single-family home rental prices grew by 7.8% on average in 2021 — the highest such number ever recorded.

Institutional Investors Eye Rentals

Upward pressure on home prices has predictably left a number of potential buyers unable to come up with the down payment needed in order to purchase. Others simply prefer not to take on a mortgage, leaving them looking for rentals.

Meanwhile, hedge funds and private equity investors have also been buying up single-family homes in order to then put them on the rental market. One firm bought an entire neighborhood in Texas. Florida has been another state on investors’ radars. Housing research firm Zelman & Associates says over $85 billion has been invested in the purchasing and renting out of homes in recent years.

This means that as available inventory is gobbled up by small landlords and institutional firms alike, individuals are more or less forced to rent. Their monthly payments aren’t a bargain either — they’re rising in sync with the overall market.

Follow the Sun to Find Housing Hot Spots

Although places that were hard-hit by the pandemic, like New York City, are starting to see their rents recover, southern cities are still hotspots. IRents spiked 12% from the same period a year prior in December, with Miami leading the way — rents in the city rose over 35% from the final month of 2020.

Unfortunately for renters, the market looks unlikely to let up anytime soon. This is according to housing economist Jay Parsons who notes a demographic shift when it comes to purchasing vs. renting. There is a cohort of upper-income Americans that don’t want to be pinned down in one place. All of these factors are putting upward pressure on an already hot real estate market.

Things are changing daily within the financial world. Sign up for the SoFi Daily Newsletter to get the latest news updates in your inbox every weekday.

Sign up

Please understand that this information provided is general in nature and shouldn’t be construed as a recommendation or solicitation of any products offered by SoFi’s affiliates and subsidiaries. In addition, this information is by no means meant to provide investment or financial advice, nor is it intended to serve as the basis for any investment decision or recommendation to buy or sell any asset. Keep in mind that investing involves risk, and past performance of an asset never guarantees future results or returns. It’s important for investors to consider their specific financial needs, goals, and risk profile before making an investment decision.
The information and analysis provided through hyperlinks to third party websites, while believed to be accurate, cannot be guaranteed by SoFi. These links are provided for informational purposes and should not be viewed as an endorsement. No brands or products mentioned are affiliated with SoFi, nor do they endorse or sponsor this content.
Communication of SoFi Wealth LLC an SEC Registered Investment Adviser
SoFi isn’t recommending and is not affiliated with the brands or companies displayed. Brands displayed neither endorse or sponsor this article. Third party trademarks and service marks referenced are property of their respective owners.

All your finances.
All in one app.

SoFi QR code, Download now, scan this with your phone’s camera

All your finances.
All in one app.

App Store rating

SoFi iOS App, Download on the App Store SoFi Android App, Get it on Google Play

ABOUT Meg Richardson Meg Richardson is a writer specializing in markets, technology, and personal finance. She loves breaking down seemingly complex ideas and making them readable and interesting for everyone. She holds an MFA in writing from Columbia University. When she is not writing about finance, she enjoys running in Central Park and drawing cartoons.

TLS 1.2 Encrypted
Equal Housing Lender