Since 2017, the cost of rent has significantly increased throughout most of the United States, with the largest increases occurring from 2021 to 2022. According to a recent study conducted by Credit Karma, the average nationwide year-over-year rent increase from 2017 to 2022 was 5.77%. However, some states and cities experienced much higher increases, while others saw relatively low increases or even a decrease in rent.
Which States Saw the Highest and Lowest Rent Increases?
The top five states with the highest increases from 2021 to 2022 were:
- South Dakota
- New York
- North Carolina
The states with the lowest rent increases include:
- North Dakota
With an increase of 22.59%, Florida saw the largest surge in rent prices between 2021 and 2022, which can be attributed to a combination of factors. During the fourth quarter of 2021, the state’s rental inventory plummeted to its lowest level in at least 16 years. In addition, the influx of new residents throughout 2021 and the first half of 2022 increased the demand for housing in the state. In contrast, Minnesota had a low increase of just 5.93% despite having relatively low vacancy rates.
Beginning in 20127, 19 states have seen rent hikes that surpassed the national average, with Idaho and Maine facing an annual average increase of over 10%. The District of Columbia, North Dakota, and Louisiana experienced increases of 0.69%, 1.17%, and 1.79%, respectively.
Despite having the lowest average yearly rent escalation rate, the District of Columbia is among the costliest places to reside in the United States. The average rent there is $1,830, the third-highest in the nation, trailing only Hawaii and California. Although Idaho recorded the largest rent increase between 2017 and 2022, its rents are middle-of-the-road compared to other states, sitting at $1,280.
Across the board, the percentage increase in rent from 2021 to 2022 was the same for both one- and two-bedroom apartments (24.2%). Between January 2021 and June 2022, the typical monthly rental fee for a one-bedroom apartment rose from $941 to $1,169, while the cost of a two-bedroom apartment increased from $1,093 to $1,339.
Which Cities Had the Highest and Lowest Increases?
The top five cities that experienced the highest rent hikes from 2021 to 2022 are:
- Naples, Florida (33.89%)
- West New York, New Jersey (32.20%)
- Ocoee, Florida (32.05%)
- Coral Gables, Florida (31.63)
- Knoxville, Tennessee (29.93%)
Given that Florida and Tennessee lead the nation in terms of the highest rent surge from 2021 to 2022, it comes as no surprise that four out of five cities with the most significant rent increase are in these two states. The remaining city, West New York, is situated in New Jersey, a state with a high cost of living, where the typical rent is $1,788 – the fourth highest in the US.
The top five cities that had the smallest rent hikes from 2021 to 2022 were:
- Lake Charles, Louisiana (16.10%)
- Lexington Park, Maryland (0.64%)
- Sparks, Nevada (0.43%)
- Rocklin, California (0.69%)
- Spokane, Washington (0.77%)
It is worth noting that the cities with the lowest rent increase aren’t necessarily located in states that experienced the smallest rent hikes, although Louisiana and Maryland are among the bottom 10.
Two Key Factors That Impact Rental Rates: Supply and Demand & Mortgage Rates
While it’s impossible to predict if and when rents will decrease, two key factors that can significantly impact rental rates are supply and demand and mortgage rates. In areas where demand is high, rents are likely to be more expensive, while lower demand typically results in lower rental rates. Additionally, increasing mortgage rates may price many potential homebuyers out of the market, further increasing demand for rentals and driving rental rates up.
For landlords, this means that tenant screening services are more important than ever to ensure that they find the right tenants who can afford the rent and will take care of the property. Through thorough tenant screening, landlords can minimize their risks and protect their investments while providing a safe and comfortable living space for their tenants.
TSCI tenant screening reports provide invaluable information to help you protect your property by selecting the best possible tenants. Our tenant screening reports are available online and allow you to defer the cost of the report to the applicant. With several options to choose from, we make it easy for you to get the information you need for complete peace of mind. Order your reports today, or feel free to contact us at 800-523-2381.
Landlords Property Managers Contact TSCI