Spurred on by an influx of new residents and steadily rising house prices, rental rates in Chattanooga have jumped more than twice the national average and far outpaced worker wage growth over the past year.
Chattanooga has ranked among the top U.S. markets for apartment rent increases over the past 12 months, according to a new study from the Zumper housing website released Tuesday.
The price of a typical one-bedroom apartment in Chattanooga has increased 16% since July 2020 to an average of $ 1,160 per month, Zumper said. Two-bedroom units, on average, grew a further 17.5% over the past year to reach $ 1,210 per month in the Chattanooga area.
Rental rate increases in Chattanooga were more than double the nationwide 7% gain for one-bedroom units and the 8.7% increase in average US rates for units. of two bedrooms.
“Rents in all parts of the country are on the rise – and fast,” said Jeff Andrews, a data reporter at Zumper who helped compile the report. ‘The first year of the COVID-19 pandemic has driven home prices up at an unprecedented rate, as homeowners and potential buyers flooded local housing markets in hopes of adjusting to quarantines , working from home and other lifestyle changes related to the pandemic. second year of the pandemic, the same seems to be happening in rental markets. “
Despite the overall increase in average rates over the past year, Zumper found that rents have fallen by more than 10% over the past year in some large, high-cost cities like San Francisco, New York and Oakland, in California, as some workers left those cities and moved. towards more affordable markets to do their work remotely.
Best Cities for Rental Rate Hikes
For a 2-bedroom rental unit in each metropolitan area, the fastest growth rates over the past 12 months have been recorded in the following cities:
1. Cleveland, up 23.6% to $ 1,360 per month
2. Detroit, up 22% to $ 1,100 per month
3. Reno, Nevada, up 19.9% to $ 1,630 per month
4. Scottsdale, Arizona, up 19% to $ 2,500 per month
5. Gilbert, Arizona, up 18.4% to $ 1,800 per month
6. Chattanooga, up 17.5% to $ 1,210 per month
Source: Zumper National Rental Report
The influx of these workers to Chattanooga, combined with land restrictions and rising house prices in Hamilton County, have kept many tenants from becoming buyers. The median price of homes sold by Chattanooga realtors last month increased by more than 22% from the previous year and this also appears to increase rental rates in Chattanooga as a larger portion of residents choose to rent rather than buy their home.
Outside investors attracted by cheaper real estate prices in Chattanooga than in neighboring Atlanta and Nashville have also increased apartment prices, with these investors spending nearly $ 500 million in the past five years to acquire facilities. existing multi-family homes in Hamilton County.
Zumper noted that many Atlanta suburbs have seen a steady influx of population over the past decade, and as a result, rents for two-bedroom units have jumped 20% in Marietta and Duluth over the past year. .
“Atlanta may not have been considered a pandemic destination, but that hasn’t stopped it from posting some of the biggest year-over-year rent gains in terms of the nation’s median rent.” , Andrews said. “While the city of Atlanta itself has seen relatively modest gains of 0.8-10.1%, the suburban area surrounding it has seen tremendous growth.”
But Zumper said the surge in the apartment market could change quickly if the delta variant of the coronavirus spreads and brings back the pandemic and its economic downturn.
“If the pandemic gets out of hand again, what happens in rental markets after that is a guessing game,” Andrews said.
Contact Dave Flessner at [email protected] or 423-757-6340.