With inflation hovering around 7%, almost everything costs more than it used to, from groceries to heating oil to cars. Even worse, one of millions of people’s biggest monthly expenses – rent – has seen a price rise that far outpaces normal inflation.
According to new data from Redfin, average monthly rent in the US rose 14.1% last month compared to the previous year — the biggest jump in two years. The increase brings average monthly rent payments in the United States to $1,877 as of December 2021, compared to $1,645 at the end of 2020.
East Coast cities, including New York, Miami, and Jacksonville, have seen particularly high rises (up 30% or more year-over-year), while Austin, Texas, has been hardest hit with rental price growth of nearly 40%.
Unfortunately, owning a home does not protect you from the rising cost of housing: mortgage payments are rising faster than rental prices. Average national mortgage payments for homebuyers with a down payment of 5% rose 21.6% year-over-year in December to $1,553, according to Redfin.
“Growth in mortgage payments has been driven by higher rates and higher mortgage rates,” Redfin Chief Economist Daryl Fairweather said in a statement. “Increasing mortgage costs are driving more potential homebuyers to rent instead, driving up demand and rent prices.”
This is especially true for millennials, many of whom are entering their peak home buying years but are choosing to rent instead thanks to the highly competitive housing market. A recent study by RentCafe, a rental search and listing company, found that the share of rental applications from millennials earning more than $50,000 a year rose to 43% in 2021 — a massive jump from 28% in 2017.
What cities have the highest increase in rent?
While rental prices are rising nationwide, some cities have seen particularly big hikes. Here are the 10 cities where rents are rising fastest, according to Redfin.
- Austin, Texas: 40%
- Nassau County, New York: 35%
- New York, NY: 35%
- Newark, New Jersey: 35%
- New Brunswick, New Jersey: 35%
- Miami, Florida: 34%
- West Palm Beach, Florida: 34%
- Fort Lauderdale, Florida: 34%
- Jacksonville, Florida: 31%
- Portland, Oregon: 29%
The average rent payment in Austin, which tops the list, is $2,290. Austin has one of the most important housing markets in the country. The median home price in Austin is up nearly 19% year-over-year to $567,000 in the past month, according to Redfin. Mortgage payments in Austin are up 37.5% over the past year, according to the new report. (Round Rock, Texas — located outside of Austin — was included in Money’s 2021 list of the best places to live thanks to a booming job market.)
Only one city included in the Redfin study saw rental rates fall in December compared to the previous year: Kansas City, Missouri, where rent fell 0.8%.
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