Where apartment construction is booming, rent is falling
of ConsumerAffairs
The cost of putting a roof over your head, as measured by the monthly Consumer Price Index (CPI), has consistently risen throughout 2024. However, the September Rental Report from Realtor.com shows there are regional variations.
For example, eight out of the 10 Midwestern markets in the report experienced year-over-year rent increases in September. The markets with the most significant rent declines were primarily in the South, largely due to a surge in new multi-family housing developments.
"The balance between housing supply and demand is crucial in shaping regional rent patterns, said Danielle Hale, chief economist at Realtor.com. In Southern markets, the increase in multi-family inventory is reducing competition among renters, leading to lower prices.
But Hale says demand for rentals in the Midwest continues to exceed supply, causing rents to rise Meanwhile, in the Midwest, where demand still exceeds supply, rents continue to rise. But she thinks relief could be on the way.
Nationally, the relative stability in rent prices should lead to slower shelter inflation in the coming months, alleviating one of the major recent drivers of price increases," Hale said.
Despite rising, Midwest rent is relatively low
Rent in the Midwest has been among the lowest in the country so, even though its going up its still considered affordable. A strong job market in the region also helps.
As a result, eight of the 10 Midwestern markets in the report saw year-over-year rent increases in September, with Cincinnati leading at a 3.4% annual growth rate. Rent in St. Louis rose 2.6% while Minneapolis rent rose 1.9%. Detroit and Chicago saw slight declines.
Southern markets led in rent declines, with eight of the top 10 metros with the steepest declines located in the South. Nashville experienced the sharpest decline at -4.8%. Other Southern cities on the list include Dallas, Austin, Birmingham, Memphis, Atlanta, Miami, and San Antonio. The rapid growth of new multi-family housing in these areas is cooling the market, providing much-needed relief for renters.
Rent for smaller units has gone down all year
Nationally, September marked the 14th consecutive month of year-over-year rent declines for 0-2 bedroom units. The median asking rent fell by $8 or -0.5% from the previous year, to $1,743.
Despite the overall decline, the U.S. median rent remains just $17 below its August 2022 peak. Although median rents are still $286 higher than in September 2019, before the pandemic, this increase aligns with the overall rise in consumer prices and is modest compared to the 50.8% increase in the median price-per-square-foot of for-sale home listings over the same five-year period.
Rent decreases were observed across all unit sizes in September, with smaller units experiencing the steepest drops. The median rent for studios fell -2.3% year-over-year to $1,442, a -3.2% drop from its October 2022 peak but 12.7% higher than five years ago.
The median rent for one-bedroom units fell 0.5% to $1,623, marking the 16th consecutive year-over-year drop. Two-bedroom units fell by 0.4% to $1,930, continuing a 16-month streak of declines. These larger units had the highest growth rate over the past five years, rising by 21.4%.
Photo Credit: Consumer Affairs News Department Images
Posted: 2024-10-17 13:05:28
