After her fiance landed a medical residency in Columbus, Ohio, last year, Shruti Kilpadikar left her apartment in Tulsa and headed east. The couple carved out about a month to find a rental in their new home city, but quickly realized they needed more time.
Before the coronavirus pandemic hit, a strong local economy and rapid job growth made Columbus one of the fastest-growing real estate markets in the country, according to a 2019 forecast by Realtor.com, the California-based online real estate service.
Despite the economic fallout in the wake of lockdowns, housing values have remained relatively steady in Columbus. And prices are up 43 percent since 2016, reaching $174,109 in March, housing data from Zillow show.
That steady rise in home prices - along with a growing population of young professionals - is forcing more home shoppers into the rental market, making Columbus more competitive than it's been in years, say local brokers. It's also pushing up rental prices: Median rents in the city have doubled over the past decade to $1,265 in January, according to figures from Zillow.
"We saw about seven or eight apartments in the first week, but a lot of the places we wanted didn't have space available," says Kilpadikar, 28, a nurse.
After searching online listings and visiting properties daily for almost a month, the couple eventually found an 800-square-foot, one-bedroom apartment renting for about $1,700, about twice what they paid in Tulsa but with half the space. The couple eventually moved again to the city's Olde Towne East neighborhood with comparable rents.
"We knew rents were going to be higher in Columbus than what we paid in Tulsa," says Kilpadikar. "So we really came prepared to pay a little more in a tighter market."
The rental market in many metropolitan areas has been tightening for years as house hunters from Denver to Boston find themselves priced out of soaring property markets and joining the ranks of renters.
Although the economic fallout from the novel coronavirus hobbled many places in the United States - sparking deep rent discounts in some areas - a growing number of cities are now seeing steadying prices.
Rent prices increased
Nationally, rent prices increased 2.4 percent year over year in April, according to the CoreLogic Single-Family Rent Index (SFRI). That's down from a 2.9 percent year over year increase in April 2019.
"While disruptions in the economy affect all parts of the housing market, the impact can often be seen in the rental market sooner than the for-sale market," says Molly Boesel, principal economist at CoreLogic. "This means changes in rents can foreshadow changes in home prices."
Developers, meanwhile, are still expected to add 371,000 rental units this year, a 50 percent increase over the number of units completed in 2019, and the highest in any year since the 1980s, according to data from real-estate analytics firm RealPage. But as much as 80 percent of those new units will target the luxury sector, the RealPage analysis shows.
While those at lower-income levels are typically squeezed most when prices rise and supply sags, middle-income renters are now feeling the pinch. That's a fundamental shift in market dynamics since the Great Recession, says Chris Herbert, managing director of the Joint Center for Housing Studies at Harvard University.
"It has become harder than ever for middle-income Americans to pay the rent," he says.
Even before the pandemic, Herbert says the number and share of renters burdened by housing costs rose last year after a couple of years of modest improvement. "And while the poorest households are most likely to face this challenge, renters earning decent incomes have driven this recent deterioration in affordability."
Up to 28 million renters are at risk of eviction, foreclosure
Today, amid record unemployment in the wake of stay-at-home orders, up to 28 million renters are at risk of eviction or foreclosure because of the coronavirus, according to Amherst, a data and analytics real estate firm. Millions have applied for state and federal rental assistance programs.
A report by the Joint Center released before the pandemic showed the number and share of renters burdened by housing costs rose last year after a couple of years of modest improvement.
The report by the Joint Center shows the number of high-income renters continued to climb, increasing by 545,000 between 2016 and 2018 alone. Households earning at least $75,000 per year accounted for three-quarters of the growth in renters since 2010 - up by 3.2 million - while the number earning less than $30,000 fell by nearly 1 million, the report shows.
Adding to the housing crunch: Renting is increasingly more common among those traditionally more likely to own their home, including those aged 35 to 64, adults over 65 years old and married couples with children. Families with children now make up a larger share of renter households (29 percent) than owner households (26 percent), the Joint Center report shows.
These factors are pushing prices for rental apartments to record highs, rising 150 percent from 2010 to late 2019, the Harvard study says.
"Rising rents are making it increasingly difficult for households to save for a down payment and become homeowners," says Whitney Airgood-Obrycki, a research associate at the center and lead author of the new report. "Young, college-educated households with high incomes are really driving current rental demand."
Greg Rand, chief strategy officer at Renters Warehouse, a real estate investment services company, says rising prices and a tightening inventory of rental homes is not just a trend in pricey markets like New York. The company is one of the largest managers of rental houses in the country with properties in more than 40 markets, including Tampa, Minneapolis and Charlotte.
"Demand is up in many of these mid- and smaller markets, too, because you still have a lot of people who can't afford to buy a home in these places," Rand says. "Rents are rising and that's putting pressure on renters across all income brackets, including those earning at the higher end."
Nationally, the rental market is the tightest it's been in more than a decade, with only 4.7 percent of apartments nationwide vacant in the fourth quarter of 2019, down from a high of 8 percent in 2009, according to real-estate data firm Reis.
In August, Colin Harris and his wife, Elizabeth, decided to leave the high housing costs in Seattle and moved to Las Vegas.
Using Renters Warehouse, the couple in October signed a lease on a three-bedroom rental home in Spring Valley, a popular area about two miles west of the Las Vegas Strip. The 1,350-square-foot home rents for $1,450 a month, says Harris, a 29-year-old director of photography at a fitness center.
"In Seattle, we were paying $1,625 for just a one bedroom and that was at the lower end of the market," says Harris. "We both knew we needed to find a place that we could afford but that would also allow us to have more of a life, with space to grow a family."