Renters across the United States have been feeling the strain of rising housing costs in recent years. According to a new study from LendingTree, which analyzed data from the U.S. Department of Housing and Urban Development (HUD), Fair Market Rents (FMRs) have increased significantly in the 50 largest metropolitan areas in the country since 2019.
These rising costs are making affordability a challenge, particularly for renters in the most competitive housing markets. The study highlights how much one- and two-bedroom rental prices have climbed over the past five years, revealing some surprising trends about where affordability has changed the most.
What Are Fair Market Rents (FMRs)?
Before diving into the numbers, it’s important to understand what Fair Market Rents (FMRs) represent. HUD calculates FMRs each year to estimate the cost of rental housing in different areas. These estimates help determine housing assistance levels for government programs like Section 8 housing vouchers.
FMRs are based on factors such as:
- Recent rental market trends
- Inflation and cost of living changes
- Supply and demand for rental properties
In general, FMRs reflect the median rent that a tenant can expect to pay in a given market, including utilities.
How Much Have Rents Increased?
According to the LendingTree study, Fair Market Rents have risen in every single metro area since 2019, with the average increase across all cities being $450 for one-bedroom units and $505 for two-bedroom units.
Here’s a breakdown of where FMRs have risen the most and where the increases have been relatively smaller:
Metro Areas with the Biggest Rent Increases
The cities that have seen the steepest increases in Fair Market Rents tend to be those experiencing high population growth, housing shortages, and strong job markets.
One-Bedroom Units:
- New York, NY:
- 2019 FMR: $1,599 → 2024 FMR: $2,451
- Increase: $852
- Miami, FL:
- 2019 FMR: $1,147 → 2024 FMR: $1,884
- Increase: $737
- Phoenix, AZ:
- 2019 FMR: $868 → 2024 FMR: $1,599
- Increase: $731
Two-Bedroom Units:
- New York, NY:
- 2019 FMR: $1,831 → 2024 FMR: $2,752
- Increase: $921
- Miami, FL:
- 2019 FMR: $1,454 → 2024 FMR: $2,324
- Increase: $870
- Sacramento, CA:
- 2019 FMR: $1,220 → 2024 FMR: $2,072
- Increase: $852
These sharp increases have far outpaced wage growth in many of these cities, putting financial pressure on renters. Many individuals and families are forced to allocate a larger portion of their income to housing, limiting their ability to save or spend on other essentials.
Metro Areas with the Smallest Rent Increases
While every metro saw an increase, some areas have remained relatively more stable. This is often due to a combination of factors such as lower population growth, a larger housing supply, and slower economic expansion.
One-Bedroom Units:
- Raleigh, NC:
- 2019 FMR: $650 → 2024 FMR: $711
- Increase: $61
- Oklahoma City, OK:
- 2019 FMR: $689 → 2024 FMR: $884
- Increase: $195
- Milwaukee, WI:
- 2019 FMR: $753 → 2024 FMR: $979
- Increase: $226
Two-Bedroom Units:
- Raleigh, NC:
- 2019 FMR: $744 → 2024 FMR: $925
- Increase: $181
- San Francisco, CA:
- 2019 FMR: $3,170 → 2024 FMR: $3,359
- Increase: $189
- Oklahoma City, OK:
- 2019 FMR: $867 → 2024 FMR: $1,091
- Increase: $224
Notably, San Francisco saw one of the smallest increases, which is interesting given its historically high rent prices. This is likely due to factors such as remote work trends, an outflow of residents, and increased rental vacancies.
Why Are Rents Rising?
The surge in Fair Market Rents can be attributed to a mix of economic, demographic, and housing market factors. Some of the key reasons include:
-
Supply & Demand Imbalance:
There simply aren’t enough rental units to meet growing demand, especially in high-growth cities like Miami, Phoenix, and Austin. -
Inflation & Cost of Living:
Rising costs for property maintenance, utilities, and taxes have led landlords to raise rent prices to maintain profitability. -
High Mortgage Rates:
With mortgage interest rates increasing, many potential homebuyers are delaying purchases and staying in rental properties longer, further tightening the rental market. -
Job Market Strength in Certain Cities:
Areas with booming industries (like tech in Miami or finance in New York) tend to attract more professionals, leading to greater housing demand.
What Can Renters Do?
With rent increases showing no signs of slowing down, renters may need to strategize to keep housing costs manageable. Here are some potential solutions:
-
Consider Relocating to a More Affordable Metro:
If remote work is an option, moving to a metro with lower rent increases (like Raleigh or Oklahoma City) could lead to significant savings. -
Look for Housing Assistance Programs:
Renters should check whether they qualify for Section 8 vouchers or other rental assistance programs. -
Negotiate Lease Renewals:
Some landlords are open to negotiations, especially if a renter has a strong history of timely payments. -
Explore Co-Living or Roommate Options:
Sharing a rental with roommates can help offset increasing costs. -
Stay Informed on Rental Market Trends:
Being aware of pricing trends can help renters make informed decisions when signing a new lease.
Final Thoughts
The rise in Fair Market Rents across U.S. metro areas reflects a challenging rental landscape, especially in cities where demand continues to exceed supply. While some areas have experienced moderate increases, renters in cities like New York, Miami, and Phoenix are seeing costs skyrocket.
Understanding these trends can help renters plan ahead, negotiate better deals, and explore alternative housing options. As housing affordability remains a pressing issue, policymakers and developers will need to address supply shortages to prevent further financial strain on renters.
For a detailed breakdown of the study, check out the full report from LendingTree here.