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As rising interest rates and soaring home values prevent more families from buying a home, rental demand has soared, with rental prices highest in the sunniest states.
Rent prices for single-family homes have ballooned in the first half of 2022, reaching a national average of $2,495 per month – a 13.4% increase from the same period in 2021, according to a new report of national real estate brokerage HouseCanary.
While cities in warmer climates like California and Florida dominated the list for the highest median rental prices, Midwestern states like Ohio took the top spots for the most affordable rents, according to the report.
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The findings come as more Americans, including six-figure earners, live paycheck to paycheck amid rising costs.
Annual inflation jumped 9.1% in June, rising at the fastest pace since late 1981, according to the US Department of Labor.
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These U.S. metropolitan real estate markets had the highest median monthly single-family rents during the first half of 2022:
- Los Angeles; Long Beach, California; Anaheim, California: $4,664
- San Diego; Carlsbad, CA: $4,617
- Bridgeport, Connecticut; Stamford, Connecticut; Norwalk, Connecticut: $4,352
- San Jose, California; Sunnyvale, California; Santa Clara, CA: $4,294
- Oxnard, California; Thousand Oaks, California; Ventura, CA: $4,259
These U.S. metropolitan real estate markets had the lowest median single-family monthly rents during the first half of 2022.
- Mobile, Alabama: $1,419
- Dayton, Ohio; Kettering, Ohio: $1,412
- Wichita, Kansas: $1,397
- Akron, Ohio: $1,361
- Canton, Ohio; Massillon, Ohio: $1,314
The pandemic has accelerated the trend to leave expensive coastal towns for more affordable areas as more and more Americans moved to remote work.
And a record number of U.S. homebuyers are still considering cheaper options in cities like San Francisco, Los Angeles and New York, according to a July report by Redfin. However, working remotely can have a hidden cost.
While many have appreciated the benefits of remote working, research shows it can stunt wage growth over time, according to a work document published by the National Bureau of Economic Research.
While moving to a less expensive area may lower your rent or mortgage, other unforeseen costs can hurt your budget, experts say.
“Losing your network or your village is a big hidden expense,” said certified financial planner Bill Parrott, president and CEO of Parrott Wealth Management in Austin, Texas.
Without access to friends and family, costs such as childcare, pet sitting and more can add up quickly, he said.
And traveling can be more expensive from a small town, depending on your airport or transportation options, said Caleb Pepperday, Pittsburgh-based CFP and wealth adviser at JFS Wealth Advisors.
“It’s best to research some of these costs before moving to a new city to help you make your decision,” he said.