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As rising interest rates and rising property values keep more families from buying a home, rental demand has soared, with rental prices highest in the sunniest states.
Single-family home rental prices rose in the first half of 2022, reaching a national average of $2,495 per month, a 13.4% increase compared to the same period in 2021, according to a new report from the national real estate brokerage HouseCanary.
While cities in warmer climates like California and Florida dominated the list of highest median rental prices, Midwestern states like Ohio took the top spots for most affordable rent, according to the report.
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The findings come as more Americans, including some six-figure earners, live paycheck to paycheck amid rising costs.
Annual inflation rose 9.1% in June, growing at the fastest pace since late 1981, according to the US Labor Department.
5 US meters with more expensive monthly rents
These US metropolitan real estate markets had the highest average single-family monthly rents in the first half of 2022:
The angels; Long Beach, California; Anaheim, California: $4,664 San Diego; Carlsbad, Calif.: $4,617 Bridgeport, Conn.; Stamford, Connecticut; Norwalk, Connecticut: $4,352 San Jose, California; Sunnyvale, California; Santa Clara, Calif.: $4,294 Oxnard, Calif.; Thousand Oaks, California; Ventura, California: $4,259
5 US meters with less expensive monthly rentals
These US metropolitan real estate markets had the cheapest average single-family monthly rents in the first half of 2022.
Mobile, Alabama: $1,419 Dayton, Ohio; Kettering, Ohio: $1,412 Wichita, Kansas: $1,397 Akron, Ohio: $1,361 Canton, Ohio; Massillon, Ohio: $1,314
Remote work can slow wage growth
The pandemic accelerated the trend of abandoning expensive coastal cities for more affordable areas as more Americans switched to remote work.
And a record number of U.S. homebuyers are still looking for cheaper options in cities like San Francisco, Los Angeles and New York, according to a July report from Redfin. However, remote work can have a hidden cost.
While many have enjoyed the benefits of remote work, research shows it can hold back wage growth over time, according to a working paper published by the National Bureau of Economic Research.
There may be other “hidden” moving expenses
While moving to a cheaper area can lower your rent or mortgage, other unexpected costs can hurt your budget, experts say.
“Losing your network or your village is a huge hidden expense,” said certified financial planner Bill Parrott, president and CEO of Parrott Wealth Management in Austin, Texas.
Losing your network or your village is a huge hidden expense.
Bill Parrott
President and CEO of Parrott Wealth Management
Without access to friends and family, costs like child care, pet sitting and more can add up quickly, she said.
And travel can be more expensive from a smaller city, depending on the airport or transportation options, said Caleb Pepperday, a Pittsburgh-based CFP and wealth advisor at JFS Wealth Advisors.
“It’s best to research some of these costs before moving to a new city to help make your decision,” she said.
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