For Atlanta real estate agent Jamie Douglas, a dearth of inventory has made it almost impossible to take on new clients hunting for affordable rental homes.
Now, she works with people who have at least $5,000 a month to spend on rent, double her usual base of around $2,500 because there’s just nothing available at lower price points. One house will get 15 to 20 applications and be rented within a day, she said.
“I literally have people begging me to get them a rental,” Douglas said in an interview. “It’s just so crazy down here.”
It’s the latest turn in the unrelentingly hot U.S. housing market, where remote workers and young families fleeing coastal cities for the Sun Belt during the pandemic spurred double-digit increases in housing costs and squeezed supply. And at a time when stocks are slumping, cryptocurrencies are crashing and interest rates are set to rise, real estate seems to be the only area of the market impervious to a slow down.
Rental prices for single-family homes grew an average of 7.8% in 2021, an all-time high, according to the most recent data available from CoreLogic Inc. In December, U.S. home rents jumped 12% year over year for the month, with Miami leading the way with a 35.7% increase.
Home values have been increasing in lockstep, with the median home price jumping 14% year over year in January to $354,750, according to Redfin Corp. Active listings fell 29% to an all-time low of 438,000 due to tight supply. Mortgage payments have continued to climb, reaching an all-time high of $1,877 due to higher borrowing costs and asking prices, the firm said.
The appeal of rentals has grown in recent years as people have been priced out of the housing market or are unwilling to take on the financial burden of a mortgage. Institutional investors have added further pressure to home prices by snapping up existing single-family homes to rent out — so much so that they’re starting to build new ones. Landlords, builders and institutional backers have committed $85 billion to that effort, according to Alan Ratner, an analyst at housing research firm Zelman & Associates.
Invitation Homes Inc., the largest single-family landlord in the country, said in a statement that it intends to keep building homes to meet surging demand. Right now, its holdings represent less than 1% of the rental market.
Housing economist Jay Parsons said pressure on the rental market is unlikely to let up any time soon because of an overall shift in the desirability of renting.