A wave of young renters who left major metropolitan areas like New York City and Chicago during and after the COVID-19 pandemic in search of more affordable living are now finding that some of their chosen destinations are no longer as cheap as anticipated.
Exclusive data compiled by Zillow for the Daily Mail indicates that median rents in smaller cities that experienced an influx of new residents have surged, beginning to strain the budgets of these recent arrivals. Sun Belt markets, long attractive for their climate and relative affordability, have seen rents rise significantly due to the surge of newcomers since the pandemic, according to Zillow & StreetEasy Senior Economist Kenny Lee.
Charleston, South Carolina, a coastal city that saw its population grow by 7.6 percent between 2020 and 2024, is an example of this trend. Rents in Charleston have increased by 32.5 percent since August 2021, a notable surge among analyzed cities, and continue to climb at an annual rate of 4.2 percent. The typical asking rent in Charleston now stands at $2,062 per month, up $506 from $1,556 in August 2021. Zonda Economics forecasts another 9.1 percent increase by 2029.
The rise in rents is attributed to a mismatch between demand and the supply of new apartments. In Charleston, completions of new apartments fell more than 70 percent from their peak, and construction starts have collapsed, leading to steady population and job growth encountering limited new housing stock, according to Ben Kriegsman, vice president of capital markets at Lion Real Estate Group. While the influx of newcomers in 2021 and 2022 initially boosted demand, continued population and job growth have since put pressure on a market with a shrinking supply of new housing.
In contrast, some cities have experienced falling rents. Austin, Texas, has seen rents decrease by approximately 8 percent since mid-2023, according to economist Aziz Sunderji. This decline is due to a slowdown in migration coupled with a flood of new apartments entering the market, creating a supply surplus. Sunderji described this as a developer miscalculation in response to pandemic-era demand. Similarly, San Antonio, Denver, Phoenix, and Dallas have also seen rents decline from recent peaks, often associated with high housing valuations and slowing migration.
Larger Sun Belt metropolitan areas such as Atlanta, Dallas-Fort Worth, Charlotte, and Nashville have managed to keep rents stable or even lower them by building at a record pace during the boom. Dallas-Fort Worth, for instance, added over 33,000 housing units in a single year, with rents remaining flat or declining since late 2023. Atlanta has only recently returned to positive rent growth after a period of decline.
However, in cities like Charleston, the weaker supply response means renters are increasingly competing for a limited number of homes. This can lead renters to seek smaller apartments, take on roommates, or relocate further from urban centers. Development is shifting toward areas like North Charleston, Summerville, and Goose Creek, where housing is more affordable and new units are under development. This trend of affordability erosion means that while a metro area continues to attract people, the affordable living areas are pushed farther out, potentially increasing commute times and transportation costs.
Kriegsman cautions against attributing rent increases solely to newcomers, noting that local job growth, household formation, and supply dynamics are significant drivers. While Charleston remains considerably cheaper than New York City, the gap is narrowing. A renter in Charleston now faces a typical asking rent that is $506 higher than in August 2021.
Similar dynamics may unfold in other smaller markets like Savannah, Georgia, and Huntsville, Alabama, where renter populations are growing and new construction is tapering. On a national level, apartment deliveries and construction starts have significantly decreased, a trend that could lead to a future firming of rents in many markets, potentially signaling another shift in the rental cycle. The narrative of a mass migration to universally 'cheap' Sun Belt cities is becoming more complex, with some destinations preserving affordability through aggressive building, while others face rising costs due to demand outpacing new construction.
