apartment rent is going down from all-time high This offers prospects of relief for the millions of tenants that surged during the pandemic.
Apartment asking rents fell 0.1% nationwide in August from July, according to a report by real estate data firm CoStar Group. It was the first monthly rent drop since December 2020, according to the company.
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Other surveys also showed varying degrees of rent declines. His Rent.com, an apartment information site, showed that the rent for his one-bedroom apartment fell 2.8% in the same month. His third reading from the rental property website Realtor.com also shows that his August rent decreased slightly each month.
News Corp, owner of The Wall Street Journal, also operates Realtor.com under license from the National Association of Realtors.
According to Realtor.com, the drop in rents last month was modest compared to the 23% increase in overall rents since August 2020, and there’s no guarantee rents won’t rise again. Giraud Group economist Orphee Divongay said rising mortgage rates and record selling prices could lead to a sharp decline in rental demand as more households feel discounted from the sales market. said low.
However, many economists say the rental market is likely to fall further in the coming months. Prices usually drop in the fall and winter. CoStar expects rents to fall for his second straight month by the end of September.
Other analysts said they expected rents to fall on a monthly basis or remain flat through the end of the year at least. This contrasts with the same period in 2021, when rents continued to rise.
rent growth rapidly set a record Over the past two years, some analysts attribute the explosion in demand for stayed apartments, caused by early pandemic lockdowns. a boom in home sales prices, discouraged some people from buyingalso boosted rental demand.
Rents are now moderate due to a combination of factors, analysts said. This could be due to weakening consumer sentiment, in addition to increased construction of new apartments, deterring people from signing leases for more expensive apartments.
However, there is still a long way to go before the cost burden for lessees will be significantly reduced. Most apartment tenants sign a one or two year lease with a fixed monthly fee. The discrepancy between today’s market rent prices and what most tenants are actually paying is an indication of why housing costs are still rising, as tracked by the Bureau of Labor Statistics’ Consumer Price Index. It is also a part.
Falling rents if the rental market continues to soften It should be clearer with the official inflation rate Sometime in 2023, said Jay Parsons, a housing economist at rental software company RealPage.
Investors are also taking cues from the latest report on market rents rather than key inflation rates. “Rent growth is slowing month-over-month,” Barry Sternlicht, CEO of investment firm Starwood Capital Group, told CNBC in a recent interview. Starwood is one of the largest owners of multifamily homes in the United States.
Still, apartment rents in most countries are much higher than they were a year ago, even though prices are currently below peak. Renters looking for a home can usually expect to pay more than they currently pay.
Nationally, August rents were 7.1% higher than the same month last year, according to CoStar.
Rental prices have increased significantly during the pandemic in some markets that are currently cooling. Median rents in Manhattan fell short of a record in August for the first time in seven months, according to a report by Douglas Elliman real estate appraiser Jonathan Miller.
In Phoenix, rents fell 0.4% from July to August as less tenants chose to renew their leases, according to RealPage. RealPage’s Parsons said occupancy rates are currently down, which could indicate that some people are opting to share apartments he doubles.
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