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US rent prices finally showing signs of cooling down

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Americans are finally starting to see the sweltering rental market, which has seen record growth, begin to cool down.

strong demand, low supply, high inflation has continued to put pressure on rental prices nationwide, but for the first time in 20 months, the asking price turned negative, falling 0.1% from July to August. coster group.

CoStar Group, which provides online real estate markets, information and analytics, said this indicated a “worsening rental market.”

But it’s a welcome relief for Americans whose rents are rising while dealing with inflation.

Rents have risen in the first half of 2022, reaching a national average of $2,495, according to the report. HouseCanary’s National Rental Report.

Residential apartments in New York City.

Spencer Pratt/Getty Images

Rental prices are still rising year-on-year, but the pace of growth has slowed. According to CoStar, asking rents in August fell from 8.4% at the end of July to 7.1% at the end of July.

The cities with the fastest rent increases in 2021 are now witnessing the biggest declines.

Palm Beach has seen the most dramatic slowdown in growth, with asking rents falling from 30.6% in Q4 2021 to 8.2% at the end of August, according to CoStar. Phoenix followed closely, with August year-over-year rents dropping from 21% to 5.2% at the end of 2021. Rents in Tampa and Las Vegas also fell by double digits this year.

Yet nearly half of all renters in the US pay more than 30% of their annual income on rent. according to reports From the Center for Shared Housing Research at Harvard University.

Marissa DuBee remembers being in “sticker shock” when looking for rental properties this summer.

DuBee, a 30-year-old social media marketer, and her fiancé, Troy, a commercial truck driver, rent a fully furnished, 1,700-square-foot, three-bedroom home in Greentown, Pennsylvania, for $1,250 a month. was She told ABC News that their landlord decided to sell the house this spring by cashing in on the hot her housing market. She said the two are trying to save as much as possible for their wedding in November 2023.

Photo: Condos in Palm Beach, Florida

condominium in palm beach florida

Educational Images/Universal Image Group via Getty

“Once you go out alone, it’s always hard to come back,” she said.

DuBee said he now rents a much smaller rental property in the same town for $1,300 a month.

“Both of us are working as hard as we can to plan our dream wedding, to meet our objectives,” she said. It’s definitely challenging, but I know it’s all worth it in the end.”

Housing accounts for about a third of inflation. The consumer price index hit an annualized 8.3% in August, the highest in nearly 40 years, according to the Labor Department. The average hourly wage in August rose 5.2% year-on-year.

When 22-year-old college graduate Grace Villiano, who has a rental budget of $4,000 a month, was looking for an apartment in Manhattan this past August, she and her roommate had a lot of options. What they found was fierce competition and bidding wars for far too few apartments.

“All the apartments scheduled for open houses had their contracts signed within 20 minutes of us contacting the property,” Villiano said. I’ve had thousands of offers presented to me by people I’ve never met, and honestly, overall, I could barely step in the door and finally agreed to an apartment I had to agree to. It was very frustrating that I felt compelled to look at it, or maybe even look at the floor plan.”

Photo: Miami, Florida

Miami, Florida

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While some markets are showing signs of stabilizing rents, New York City rents remain at all-time highs. This summer, the average monthly rent in Manhattan topped $5,000 for the first time. according to reports By real estate appraiser Miller Samuel.

A New York City property manager who owns more than 2,000 rental properties in Manhattan says inflation is also affecting landlords. He told ABC News on condition of anonymity that the property manager said, “Utilities such as water and gas, maintenance costs and staff payments have increased, and this has kept rents high. That’s the main reason,” he said.

Property managers are also comparing prices during the pandemic, when many landlords were cutting rents and offering big perks to lure renters back to big cities, so current rents in the city are Said it might look artificially high.

For many Americans, rising mortgage rates continue to complicate the question of whether to buy or rent, experts said. Mortgage payments for monthly rent hit record highs in some markets.

according to Mortgage Bankers Associationthe median monthly mortgage payment was nearly 1.5 times the median monthly asking rent in the second quarter.

Analysts say many people, especially first-time homebuyers, may have been forced to postpone their home purchases, which could put further pressure on rental prices.

But there are also reasons for optimism. Analysts said a record amount of apartment construction next year would help ease supply shortages and help keep rental prices down.

CoStar expects rental growth to continue to slow over the next few months, entering the year 6.2% higher than last year. Things are expected to slow further in 2023, when CoStar forecasts a 4.9% rise in rents.

Tenants have less control over price increases, but experts say that renewing current leases usually tends to be lower than rents offered to new tenants, so renewing current leases can Rent increases are likely to be minimal. They also recommend securing longer term leases to avoid annual rent increases.

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