As tech companies are slowly announcing their return to office plans, the rental markets in the nation’s largest tech hubs began to turn around in April, while rental markets across the country took a big step toward returning to pre-pandemic norms, according to the realtor.com® Monthly Rental Report.
Data shows that in April, the U.S. median rent averaged $1,483, up 2.7% year-over-year and the fastest growth since March 2020. Prior to the onset of COVID in March 2020, rents were growing 3.2% annually.
The dramatic fall in prices in 2020 in the nation’s largest tech cities due to remote work, were down 5.4% from a year ago, show an improvement from the 6.6% decline registered in February.
The tech market recovery
In April, the median rent in the nation’s tech centers was $2,086, up 1.1% from March. Although rents continue to be lower in the largest tech centers like San Jose, Calif. (-12.5%), San Francisco (-10.9%), and Seattle (-7.3%), the declines are lessening, especially for larger two-bedroom units.
Denver and Austin, Texas, are leading the rental market recovery in U.S. tech hubs, with the median rent up 2.2% in Denver and 1.7% in Austin year-over-year.
Smaller metros see double-digit rent growth; two-bedroom units surpass pre-COVID growth
Riverside (+15%) and Sacramento (+13.6%), Calif., led the nation in growth in April. Much of their success can be attributed to their relatively affordable median rental prices, of $1,950 and $1,704, respectively, when compared to neighbouring Los Angeles and San Francisco. Both Memphis, Tenn. and Tampa, Fla., saw median rents grow by over 12%, compared to last year.
Work from home is still a reality for many. As such, space has been a priority for home buyers and renters alike, and that rise in demand has been reflected in home listing prices and now in rents for larger units.
The month of April saw two-bed units surpass their pre-COVID growth rates, reaching a median of $1,662, up 5.2% year-over-year. In March 2020, two-bedroom rents were growing 3.5% year-over-year.
However, Studios, which tend to be more plentiful in larger, more expensive markets, are still seeing declines in rent. The median studio rent was down 1.9% year-over-year in April.