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Rents Rising: Top Metro Areas Most And Least Affordable For Renters

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  Written by Zach Wichter – 2 min read – Edited By Suzanne De Vita 

Throughout the pandemic, you might’ve heard that renters were getting a reprieve as landlords held out deals to keep tenants in town. That may have been true in the most expensive markets, but nationally, rents experienced their sharpest increase in recent history in the last two years. Now, that trend may be turning back in favor of the tenants again.

While rents are still increasing, the rate of that increase slowed to 16.8 percent year-over-year in March, down from 17.2 percent in February. That translates to an average rent of $1,904 nationally, and this marks the first time since February 2021 that the pace of rent increases declined, according to Zillow’s Observed Rent Index (ZORI). ZORI data includes single-family home rentals and apartments in the 100 largest metro areas in the U.S.

The Miami-Fort Lauderdale, Florida metroplex saw the largest year-over-year increases in March, averaging 32.6 percent. Youngstown, Ohio saw rents decline slightly from February.

5 most affordable metro areas for rentals

  1. Youngstown, Ohio: $885
  2. Wichita, Kansas: $930
  3. McAllen, Texas: $1,017
  4. Little Rock, Arkansas: $1,078
  5. Akron, Ohio: $1,148

5 most expensive metro areas for rentals

  1. San Jose, California: $3,133
  2. San Francisco: $3,118
  3. Ventura, California: $2,970
  4. New York: $2,934
  5. Los Angeles: $2,853

Rent vs. own: Which is more cost-effective?

The median sale price for an existing home in the U.S. was $375,300 in March, according to the National Association of Realtors. With 20 percent down and a 4.366 percent interest rate — Bankrate’s average on 30-year fixed mortgages in March — the monthly payment for a property at that price would be $1,497 before taxes, insurance or HOA fees.

So, if you can afford the down payment and the other fees aren’t too high, owning can actually be less expensive than renting in terms of the monthly payment, depending on where you live. In the long term, even if your mortgage payment is slightly higher than your rent, you can expect to build wealth via equity.

That said, becoming a homeowner isn’t right or possible for everyone. If your goal is to own a home, focus on renting a place that’s cheap enough for you to put some money into savings toward a down payment while you wait for the numbers to work out. If you’re more concerned about living somewhere where things like unexpected maintenance are taken care of for you, renting long-term might be a better solution.

How to prepare for rent increases

With rents rising almost everywhere right now, it’s important to plan ahead if buying a house isn’t in the cards — you don’t want to find yourself in a situation where you can no longer afford your rent. Talk to your landlord early to see if you should expect a rent increase when your lease is up for renewal. If you can’t afford the charges to come, do your research about where you might want to move. Always make sure you have an emergency savings fund. A healthy savings account can help you bridge the gap until you find a situation that’s more financially feasible.

How to go from renting to owning

One of the best ways to protect yourself against unexpected rent increases is to purchase your home. Fixed-rate mortgage payments are much more predictable than your landlord’s whims. Homeownership can be more affordable than you might think, too. There are lots of low-down payment mortgage options available, and some borrowers might even qualify for financing that requires no down payment at all.

The key first steps are figuring out how much house you can afford and researching your mortgage options. It’s important to set a budget early on and do your best to stick to it. Check out Bankrate’s guide on how to become a homeowner for more, and consider looking at the most affordable markets if you’re flexible with where you can live.

Learn more:

Bankrate, posted on SouthFloridaReporter.com, April 21, 2022

Republished with permission

Bankrate.com publishes original and objective content to help you make smarter financial decisions. Our award-winning reporters and editors provide expert advice on nearly every major financial decision you may encounter — from purchasing your first home, to selecting a new car, to saving for retirement.

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