Why San Joseans rent but often can’t buy

When even starter homes are financially out of reach, what’s incentivizing Santa Clara County residents to build a life here? (And is it surprising, then, that SC was CA’s #2 most vacated county in 2021?) Realtor.com serves the numbers on home renting and buying in metro areas. At #5, San Jose boasts a $2,175 discrepancy between renting and buying costs per month — making settling down in the capital of Silicon Valley near-impossible.

The median rent across the 50 largest US metropolitan areas reached $1,876 in June, a new record level for Realtor.com data for the 16th consecutive month. Year-over-year rent growth, though, continued to fall in an indication that the rent eruption of the past two years may be beginning to subside. The 14.1% growth rate is the latest installment in the 5-month skid from a 17.3% peak in January. Despite the slowdown, rent remains 23.9% higher than it was in June 2020 and 27.6% higher than in June 2019.

Miami again takes the top spot in terms of year-over-year rent growth, but at 37.4%, its lead over its Florida neighbor in second place, Orlando (23.9%), has shrunk from recent months. Also among the markets with the highest rent growth are other Sun Belt cities like Austin (19.6%), San Diego (19.1%), San Jose (18.5%), Nashville (18.4%), and Charlotte (18.4%); with the Northeastern markets of Providence (23.8%), Boston (23.6%), and New York (21.1%) rounding out the top 10. Rent grew the slowest in Minneapolis at just 3.3% year-over year, followed by New Orleans (6.6%), Philadelphia (6.8%), Riverside (7.2%), Sacramento (7.3%), St. Louis (7.5%), Rochester (8.4%), Cincinnati (9.1%), Pittsburgh (9.4%), and Detroit (9.6%). 

Local unemployment rates continued to be strong predictors of rent growth, with the top 10 rent growth markets averaging 2.87% in May 2022 and the bottom 10 averaging 3.42% compared to the average rate across the top 50 metros of 3.25%. Notable exceptions include New York, where rent growth was high despite an above-average unemployment rate of 4.2%, and Minneapolis, which has the lowest unemployment rate of the 50 metros and also the lowest rent growth. The cities with stronger economies attract more workers to compete for leases and pay higher rents, while renters in cities with higher unemployment face less competition and are less able to pay fast-growing rent charges.

This article originally appeared in Realtor.com. Read the whole thing here.

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