Post-Pandemic Rent Adjustments

Following the COVID-19 pandemic, the average asking rent in the United States has experienced a notable decline of $65 per month, equating to over $700 annually. However, despite this decrease, rental prices in most major metropolitan areas remain significantly elevated compared to 2019 levels. Joel Berner, a senior economist at Realtor.com, states, “While the median asking rent is down, rents are still considerably higher than 2019.”

Factors Behind the Decrease in Rental Prices

The reduction in rental costs can be attributed largely to a substantial increase in multi-family housing construction and permitting. This surge has provided additional rental options across many cities. Nonetheless, this growth may face challenges from the newly implemented tariffs on building materials, which are causing concern for developers.

The Impact of Tariffs on Construction

Recently imposed tariffs on essential building materials like steel and aluminum pose significant risks to the ongoing relief in rental prices. Higher costs may lead to delayed or canceled construction projects, which could eventually translate into increased rental prices as builders pass on expenses to renters. Berner noted, “Even markets with declining permitting activity could see impacts, as rising construction costs could further dampen new development plans.”

Regions experiencing rapid growth in multifamily permitting, such as Milwaukee, Oklahoma City, and Atlanta, may be especially vulnerable to the adverse effects of these tariffs.

Regional Variations in Rent Trends

While most cities are witnessing rent prices higher than pre-pandemic levels, San Francisco stands out as the sole major metropolitan area where rental prices have decreased since the pandemic began. Conversely, cities such as Pittsburgh (+47.9%), Tampa (+45.7%), Indianapolis (+34%), and Sacramento (+30.6%) have seen unprecedented increases.

Advice for Renters

Given the current fluctuations in the rental market, Berner advises renters in areas where rental prices are declining to consider securing leases at prevailing rates before potential cost increases arise due to supply pressures.