Rent growth across the country kept hitting record highs in the first month of the new year, growing by double digits for the eighth straight month. In January 2022, the national median rent had reached $1,789, up 19.8% year-over-year, increasing over five times as fast as the 3.4% growth rate seen just before the pandemic hit in March 2020. The skyrocketing growth rate has raised the average year-over-year growth of the past twelve months to 11.9%, reaching the highest level in our data history. 

In January, two-bedroom units saw a strong increase in rents. The median rent reached $2,000 nationally, $323 (19.2%) higher than the same time last year. The consistent preference for spacious homes over the past couple of years has driven the median monthly rent for 2-bed units up by $385 (23.8%) compared to two years ago, but for a second month we’ve seen a potential reversal of that trend.

One-bedroom units kept showing rapid rent growth in the new year. The median rent for 1-bedroom units reached $1,652, up by $266 (19.2%) compared to last year and 20.2% ($277) higher since January 2020, and it is now at the highest level in our data history. 

Studio units saw the largest increase in rents, and the median monthly rent hit the highest record in our data history.  In January, rents reached $1,476 nationwide, up by $256 (21.0%) year-over-year and $188 ( 14.6%) higher than it was two years ago. 

At the local level, continuing a trend seen in the December rental report , Miami, FL was the fastest growing metro area in January, with the median rent increasing 52.4% year-over-year. The other metros topping the list of fastest growing rents were Sun Belt areas, including: Tampa, FL; Orlando, FL; Jacksonville, FL; San Diego, CA; Austin, TX;  Las Vegas, NV; Phoenix, AZ; Memphis, TN; and  Riverside, CA, which all saw rents growing by over 25% compared to last January.

With worsening rental affordability, the rent-vs-buy equation for “starter homes”, one with up to 2 bedrooms, offers options for renters looking to buy. We looked at homes for sale and for rent in the same size range (0-2 bedrooms) in the top 50 metros and compared their monthly buying and renting costs. 

In January 2022,  buying was a more affordable option than renting in 26 of the 50 largest metros, whereas the number of markets favoring buying was 24 in July 2021 . The median listing price for a “starter” home, reached $295,360 in January, up 9.5% YOY on average in the 50 largest metros. However, because mortgage rates are also higher, the monthly cost of a starter home in the 50 largest metros was $1,867, rising by 11% compared to 12 months ago. Meanwhile, rents have grown 19.8% to $1,789 in that same period, outpacing the monthly cost of buying a home.

In markets that favored buying, the monthly cost of buying was 20.6% ($323) lower than the cost of renting, on average. In the top 10 metros that favor buying over renting in January, monthly payments for starter homes were 32.6% ($481) lower than rents. Birmingham, AL tops the list of markets that favor buying, where the monthly cost of buying a “starter” home was $668 in January, which was 44.4% less than the monthly rent of $1,201, for a monthly savings of $533. Cleveland, OH; Pittsburgh, PA;  St. Louis, MO; and Detroit, MI metro areas round out the top five markets where the cost of buying was lower than the monthly rent.  

In markets that favored renting in January 2022, the monthly cost of buying was 24.8% ($536) higher than the cost of renting, on average. In the top 10 metros that favor renting over buying, monthly payments for starter homes were 41.6% ($978) higher than rents. In addition, similar to findings in the July 2021 rental report , tech cities still favor renting over buying, partly due to higher condo HOA fees. Among 0-2 bedroom homes in these top 10 cities, nearly  eight-in-ten (78%) were condos, on average, compared to 55% nationwide. In the top housing markets that favored renting,  median HOA fees were $494 among homes that had this fee, while the U.S. median HOA fees were $278. Austin, TX tops the list of markets that favor renting, where the monthly cost of buying a “starter” home was $3,115 in January, which was 76.1% more than the monthly rent of $1,769, for a monthly savings of $1,346. New York, NY; San Francisco, CA; San Jose, CA; and Seattle, WA metro areas round out the top five markets where the cost of buying was higher than the monthly rent.  

Rental data as of January for units advertised as for-rent on Realtor.com®. Rental units include apartment communities as well as private rentals (condos, townhomes, single-family homes). All units were studio, 1-bedroom, or 2-bedroom units. We use communities that reliably report data each month within the top 50 largest metropolitan areas. National rents were calculated by averaging the medians of the 50 largest metropolitan areas.

The monthly cost of buying a home was calculated by averaging the median listing prices of studio, 1-bed, and 2-bed homes, weighted by the number of listings, in each housing market. Memphis for sale data was excluded while inventory data is under review. Monthly buying costs assume a 7% down payment, with a mortgage rate of 3.45 %, and include taxes, insurance and HOA fees. 

Note: With the release of its January 2022 rent report, Realtor.com® incorporated a new and improved methodology for capturing and reporting rental listing trends and metrics. The new methodology is expected to yield a cleaner and more consistent measurement of rental listings and trends at both the national and local level. The methodology has been adjusted to better account for cases where new or missing data may not be completely at random. Most areas across the country will see minor changes with a smaller handful of areas seeing larger updates. As a result of these changes, the rental data released since February 2022 will not be directly comparable with previous releases (files downloaded before February 2022) and Realtor.com® economics blog posts. However, future data releases, including historical data, will consistently apply the new methodology.

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