Rents Are Plunging In These Major U.S. Cities
As everybody knows, during the early phase of the pandemic, both single-family and multifamily rental prices surged, fueled by the shift to remote work and changing migration trends - not the least of which was getting the hell out of the city by any means necessary...
But, as CNBC/NBC now notes, the dynamics affecting rental prices have since shifted.
Multifamily rents in April dropped by 0.8% compared to the same month last year, according to Apartment List data. This decline was triggered by a significant influx of new units hitting the market, with additional developments expected.
Despite this downturn, apartment rents experienced a marginal increase of 0.5% for the third consecutive month. This growth is modest, especially considering that rents typically start to climb in the spring.
This year's increase is not only smaller than usual but also less than the growth observed in the previous month, bringing the national median rent in April to $1,396.
A report by Apartment List said: "This is typically the time of year when rent growth is accelerating heading into the busy moving season, so the fact that growth stalled this month could be a sign that the market is headed for another slow summer."
In fact, the report says that apartment vacancies have reached a peak not seen since August 2020, climbing to 6.7% as of March. While the issuance of new multifamily building permits is decelerating, the volume of units currently under construction remains near an all-time high, and last year witnessed the highest number of new apartments entering the market in more than three decades.
On the other hand, single-family rents have exhibited more resilience, showing a 3.4% increase in March year-over-year, as reported by CoreLogic. However, this growth rate is gradually decreasing as build-for-rent companies continue to add more supply to the market.
According to the National Association of Home Builders' analysis of Census data, construction began on approximately 18,000 single-family homes designed for rent in the first quarter, up 20% from the first quarter of 2023.
Over the past year, 80,000 such homes have started construction, marking a nearly 16% increase from the previous year.
This robustness in single-family rents suggests that many potential homebuyers, deterred by rising mortgage rates—now back over 7%—and climbing home prices, are opting to rent houses instead.
For the first time in 14 years, single-family attached homes, such as townhomes, have experienced a year-over-year rent decrease, highlighting a shift in the rental market dynamics
In the nation's 20 largest cities, Seattle reported the highest annual increase in single-family rents at 6.3%, followed by New York at 5.3% and Boston at 5.2%.
On the decline were Austin, Texas with a 3.5% decrease, Miami with a 3.2% drop, and New Orleans, falling 1.4%.
Molly Boesel, principal economist for CoreLogic, added: "U.S. single-family rent growth strengthened overall in March, though some weaknesses are revealed in the latest numbers. Overbuilt areas, such as Austin, Texas, continued to soften, decreasing by 3.5% annually in March."
She added: "The decrease in the attached segment is being driven by a subset of markets, mostly in Florida, but including Austin and New Orleans. As multifamily apartments are being completed, some markets are gaining rental supply, which competes with the attached segment of the single-family rental market."