The National Association of Realtors (NAR) released a report detailing changes in rental prices in many of the largest metro areas in the U.S. This report reflects year-over-year (YOY) changes from September 2019 to September 2020.
Hillsborough County and Pinellas County Rental Rates Rise
Both Hillsborough County and Pinellas County are featured near the top of lists for counties with average rental price increases. No counties in Florida appeared on the lists of rentals with decreased rates YOY.
Studio Apartment Rental Rates
Hillsborough Country ranked second on the list of YOY rental rate increases for studio apartments, trailing Tulsa in the top spot. The average rent for a studio apartment in Hillsborough was $1,245 in September of 2020, a 28.4% increase from last year’s average rate. Broward, Florida, also landed on the same list with a 13.9% YOY increase in rental rates for studio apartments.
Several counties with decreasing rental rates for studio apartments were in California, which saw the largest drops in rental rates, with San Francisco topping the list at a 31% reduction YOY.
One-Bedroom Rental Rates
Pinellas County had the 4th largest increase in rental rates YOY for one-bedroom rentals. As of September 2020, the average rate for a one-bedroom rental was $1,275. This represents an 11% increase in rates from 2019.
San Francisco topped the list of one-bedroom rental rate decreases, with a YOY decrease of 24.2% from 2019.
Two-Bedroom Rental Rates
Pinellas County ranked 4th on the list of counties with the largest two-bedroom rental rate increases, with a 10.5% increase and an average rental in September 2020 of $1,690.
Also featured on the same list is Lee County, Florida, with a 10% increase in rental rates, sitting at an average rental price of $2,200 for a two-bedroom rental.
And once again, San Francisco topped the list of counties with rental rate decreases, showing a -21.3% change in rental prices from September 2019 to 2020.
Analyzing Rental Trends
The NAR report shows interesting rental market trends for 2020, some of which are carrying over from 2019. Because of the pandemic and responses to it in 2020, some rental market trends were knocked off track while others only became accentuated.
Tampa Prices Increasing
Demand for homes in Tampa Bay, including Hillsborough and Pinellas counties, has been on a steady upward trend for years. In 2020, many people relocated to rentals in beautiful areas because of the ability to work remotely from a location of their choice.
Working from home has contributed to rental rates increasing in these areas as people seek a long-term, non-permanent option to live in a desirable location. Not needing to be close to a specific office has freed up more people to move, either temporarily or permanently, to Tampa Bay and surrounding areas.
In an already tight market with high demand for homes, extra demand for rentals has contributed to pushing the housing market higher.
High Prices Decreasing
Markets in the U.S. that have historically inflated prices are seeing massive reductions in rental prices YOY. San Francisco experienced the sharpest declines in rental prices for studio, one-bedroom, and two-bedroom rentals.
This juxtaposition between San Francisco and Tampa Bay shows a genuine demand growth in Tampa Bay. Tampa Bay remains in a strong growth phase that is largely unaffected by the pandemic or other extenuating circumstances in 2020, while mature and traditionally undersupplied, overpriced markets such as San Francisco see an unprecedented reduction in demand.
Other large metros, including those within New York City and Portland, are seeing more mixed trends.
Reduction in Tampa Bay Inventory
Tampa Bay’s strong growth has made the demand for housing, both for purchase and for rent, rise too quickly for new housing to accommodate. New homes added to the market cannot match the rate of demand growth.
Throughout 2020, this trend has been exacerbated by the new group of residents – remote workers – who are looking to move to the Tampa Metro area. Consistently ranked as one of the best places to live in the U.S., the beaches, weather, and atmosphere of the city have drawn many new renters to the area, putting a strain on the already low inventory. This likely helps to explain the large increases in rental rates in the area.
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