Rent inflation has hit the outer-ring suburbs of major metros the hardest in the last two years, according to new research from Apartment List.
The report says, “Over the past two and a half years, the rental market has been on a rollercoaster ride, as the pandemic has shaken up the ways that we live and work. As remote work has made proximity to the office less of a concern for housing choice, one result has been that the suburbs of large metros have been experiencing notably faster rent growth than the core cities that they surround,” Chris Salviati and Rob Warnock write in the report.
“We estimate that since March 2020, rents have increased by an average 19.8 percent in the core cities of large metros, while the suburbs of these metros have seen rents spike by 27.2 percent,” Salviati and Warnock write.
Remote work leads to fastest rent growth in far-flung outer-ring suburbs of major metros
The report says the impact of remote work on these changing preferences “would seem to be validated by an additional finding that emerges when we break down our suburban rent data into more granular categories.
“Namely, the fastest rent growth since March 2020 has been occurring in the suburbs that sit furthest from the urban core. For the purposes of this analysis, we have limited the data to 13 large metros where we have robust rent estimates for a wide swath of suburbs at varying distances from the core city.
“Among these 13 metros, the first year of the pandemic brought an average rent decline of 5.2 percent in the core cities. Over that same year, the outer-ring suburbs that sit more than 30 miles from the core city saw the fastest rent growth, with an average increase of 4.8 percent, roughly proportional to the decline in the core cities. Looking over the full pandemic period, rents in the core cities have risen by an average of 16.8 percent since March 2020. Over the same period, the near suburbs that lie within 15 miles of the core cities saw rents increase by 23.5 percent.
“Meanwhile, the mid-distance suburbs (15 to 30 miles from the core city) experienced rent growth of 26.8 percent, and the farthest flung suburbs that are more than 30 miles from the urban core have seen the fastest rent growth at 30.1 percent.3 In other words, rent growth has been progressively hotter moving outward in concentric rings from the urban core.
Rent Inflation: Some highlights and examples:
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- Phoenix
Phoenix Urban-Suburban Rent Growth Since 2018
- In the first year of the pandemic, rents in the city of Phoenix rose by 5.8 percent, compared to an increase of 7.8 percent in the metro’s surrounding suburbs.
- From the start of the pandemic to present, Phoenix rents are up by 33.2 percent, while the metro’s suburbs have seen rents rise by 34.9 percent.
- Among the 39 metros that we analyzed, 33 have seen rent inflation and growth in the outer-ring suburbs outpacing that of the core cities. On average, rent growth has been fastest in the suburbs that sit farthest from the urban core.
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Portland
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- Portland ranks #2 for widest gap between core city and suburban rent growth
- In the first year of the pandemic, rents in the city of Portland fell by 6 percent, compared to an increase of 4.2 percent in the metro’s surrounding suburbs.
- From the start of the pandemic to present, Portland rents are up by 7.6 percent, while the metro’s suburbs have seen rents rise by 29.3 percent.
- Among the 39 metros that we analyzed, 33 have seen rent growth in the suburbs outpacing that of the core cities. On average, rent growth has been fastest in the suburbs that sit farthest from the urban core.
Portland Urban-Suburban Rent Growth Since 2018
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Seattle-
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- Seattle ranks #3 for widest gap between core city and suburban rent growth
- In the first year of the pandemic, rents in the city of Seattle fell by 17.8 percent, compared to an increase of 0.4 percent in the metro’s surrounding suburbs.
- From the start of the pandemic to present, Seattle rents are up by 6 percent, while the metro’s suburbs have seen rents rise by 23.8 percent.
- Among the 39 metros that we analyzed, 33 have seen rent growth in the suburbs outpacing that of the core cities. On average, rent growth has been fastest in the suburbs that sit farthest from the urban core.
Seattle Urban-Suburban Rent Growth Since 2018
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Conclusion
The past two and half years “have ushered in rapid changes to the ways that we live and work, driving significant shakeups to the housing market. One such disruption has been a spike in demand for suburban rentals. Even before the pandemic, increasingly unaffordable housing costs close to the urban core had been pushing more and more renters to the far peripheries of the nation’s large metro areas, resulting in a proliferation of “super commuters.” Spiking demand in the far suburbs appears to have more to do with affordability than with geographic preference – this trend should only emphasize the need for sustainable development with easy transit-oriented access to the urban core.”
About the authors:
Chris Salviati is a senior housing economist at Apartment List, where he conducts research on economic trends in the housing market. Chris previously worked as a research assistant at the Federal Reserve and an economic consultant, and he has BA and MA degrees in economics from Boston University.
Rob Warnock is a senior research associate at Apartment List, where he examines trends in the housing and rental markets. Previously he worked in public health policy, and before that, graduated from UCLA with a degree in Globalization.
