- Tenants paying more in rent across nation’s 50 largest markets
- Median asking rent increased +1.1 y/y in March
Days of Rent Discounts and Perks Are Over
March 2021 was the first month since the beginning of last summer that the pace of rent growth increased, according to a report from realtor.com.
Landlords are no longer bending over backwards, offering discounts, or doling out freebies to their existing and/or potential tenants just to fill empty rental houses, duplexes or apartment units.
Why? Here are just a couple of reasons: 1) historically low inventory of for-sale houses is leaving more people renting and 2) expanding payrolls are bringing more people into urban areas for jobs.
Rent Increases Could Spur Inflation
The bottom line is that there is growing evidence that the economy is gaining strength. Some analysts are predicting the US economy could grow approximately 7% in 2021.
Since rent costs usually represent about one-third of the consumer-price index, rising rent costs in the coming months could spur rising inflation.
On the other hand, increasing rent costs could also become more difficult for and add to the already 1 in 6 tenants acurrently in debt due to missed rent payments.
Rent Upticks Span All Income and Property Tiers
In upscale areas such as Greenwich CT and Marin County CA experiencing escalating for-sale home prices and little inventory, “…it’s creating opportunities on the rental side,” said Greenwich real-estate developer Eric Schwartz.
Owners of moderately priced middle-income apartment buildings in places as Chicago and Tampa are raising their rents. Karlin Conklin with Investors Management Group said, “We’re raising rents, even on current residents, maybe +3% from the end of last year…and brand-new people are coming in the door.”
Asking rents in lower-cost cities such as Richmond VA and New Orleans have increased +10% or more in the past year, according to realtor.com.
Signs of Rent Turnaround Even in Hard-Hit San Francisco
Landlords/owners in San Francisco were pummeled by the pandemic. Double-digit percentages of rental declines and vacancies became the norm.
In March, however, rent in San Francisco rose +3.4% from February, according to the listings website ApartmentList. This monthly rental increase was the largest in the city since the pandemic unleashed itself.
Fastest Re-Opening Cities Seeing Fastest Rent Rebounds
The faster more workers return to in-office work, the faster rents could rebound.
Greg Willett, chief economist with RealPage, a rental-property software firm, said, “The places that are reopening most quickly, like Florida and Texas…that’s where the demand is strongest.”
Thanks to realtor.com, ApartmentList and Fox Business.
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