The domestic migration to the suburbs and beyond during the pandemic brought about more than just a change in location. Apartment rents were also on the rise in suburban areas.
Recently released data from the U.S. Census Bureau shows that suburbs of major cities, including those in counties with large colleges and universities, experienced significant population growth in the past year. Particularly noteworthy is the substantial growth from 2021 in counties surrounding major cities like Phoenix, Houston, Dallas and Miami.
Before the pandemic, people were willing to pay a premium for homes with a high level of walkability in the 100 largest metropolitan areas in the U.S., according to a new report from the American Enterprise Institute public policy think tank. When the pandemic started in March 2020, "the trend first narrowed, then flipped," and home prices in the least-walkable areas accelerated at a faster clip than in the most-walkable districts, AEI said in the report. The trend also could be seen in apartment rents.
"This is driven in large measure by the lower price per square foot of living space to be gained by moving farther away from one's job both within a metro and from one's current metro to a different one, or even a non-metro area," Edward Pinto, an AEI Senior Fellow and co-director of the AEI Housing Center, said in an email to CoStar News.
According to CoStar data, the markets experiencing the most significant apartment rent growth from the fourth quarter of 2019 to the third quarter of 2023 are: Jacksonville, North Carolina, leading the pack, followed by Naples, Florida, Valdosta, Georgia, Bloomington, Illinois, and New Bern, North Carolina. Cities like Atlantic City in New Jersey, Arizona's Tucson, and Tampa in Florida also find themselves among the top 15 in this list.
The bottom 10 markets with the least rent growth include major metropolitan areas like California's San Jose and San Francisco, which have even seen a decline in rent compared to the pre-pandemic level. Midland and Odessa in Texas are both experiencing a slowdown in rent growth among the 390 markets CoStar reviewed.
For the largest U.S. cities, rent increases have been much more gradual than in their suburban counterparts, according to CoStar data. New York City, for instance, witnessed a modest rise of 10.59% in rents per unit in the third quarter compared to the fourth of 2019. Similarly, Los Angeles saw a 9.46% increase, while Chicago experienced a 15.18% uptick during the same time.