(Bloomberg) – The largest increases in rents over the past year were mainly focused on properties of higher value. Older buildings that have lower income tenants are now catching up. 

Zumper reports that renter growth in the so-called ClassB units was faster than that of ClassA apartments during March through October.

The buildings of Class B are typically older and less expensive. Rents for these buildings are generally less volatile than those of Class A apartments. These rental prices plummeted in urban centers last year due to the abandonment of city center dwellers during the pandemic. However, they have rebounded since then. 

Low-income households are finding it more difficult to rent, which signals that the housing marketplace is heating up. Renters are leaving homes and apartments that are more costly to move into Class B communities. 

“We have seen dramatic and pronounced rent growth across the multifamily market that is just now catching up to the ‘scalding hot’ single-family housing market,” said James Morgan, principal at Morgan Properties, the second-largest owner of multifamily properties. “It comes down to supply and demand.”

Morgan said rent growth was 10% this year through September across the company’s 93,000 units. That’s up from 3.9% in the 12 months following the start of the Covid-19 crisis.

Morgan explained that the main driver is an increase in wages for those who maintain buildings. The hourly earnings gains nationwide have been a boon for working-class tenants of Class B properties.

Morgan anticipates that rents will continue to rise at above-average rates through the first half of next year — although he doesn’t expect that increases of 10% or more will become the norm in 2022 and 2023.

“Until the supply of new homes and new apartment buildings increases, we can anticipate price increases to be here to stay,” he said.

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