One of the few gifts of the pandemic was low rents. All of that is totally over now. Time again to grab a roommate and share.
Rent-Renewal Sticker Shock
Having your very own apartment in large, expensive urban centers was doable during the pandemic when landlords offered rock-bottom rents. That time is past. Very much past tense, according to rental listing sites such as StreetEasy and ApartmentList.
According to ApartmentList, apartment rentals have risen +17.1% y/y nationwide. In cities such as New York, average rents have risen +33%.
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In affluent neighborhoods such as Williamsburg in Brooklyn and on the Upper West Side of Manhattan, median rents in both places have jumped about +40% since dropping -20% at the height of the pandemic, according to StreetEasy.
The median rent in Soho exploded, again according to StreetEasy, +58% during Q4 2021 (known as the rental heatwave) from $3,800 to $6002.
Fastest Rent Growth Year/Year in Metros Nationwide
This unprecedented rent growth of +17.1% y/y, as of March 22, far outpaced year-over-year rent growth rates of any prior year, according to ApartmentList.
Take a look:
Las Vegas +24%
In the past six months, these metros have seen the fastest rent growth:
New Orleans +8%
Salt Lake City +5%
San Diego +4%
Los Angeles +4%
New York City +4%
Current Rent Prices Considered Most Expensive in Three Decades
It’s important to note here that rent is now the most expensive it’s been in three decades when comparing asking rent prices to household disposable income, according to Seeking Alpha. Incomes are not expected to rise much in the future, only +3.2% in 2023. This outlook does not consider the risk of recession in 2023, a risk being forecasted by some yield curves and economic growth indicators.
It’s also important to note that according to the National Multifamily Housing Council via its Rent Payment Tracker, the percentage of delinquent rents is at a three-year high of 8%.
The bottom line in relationship to rent prices? Renters are under pressure from rising costs and don’t have the income to support much higher rents. CoreLogic’sRent Index indicates that rent prices nationwide increased +17% y/y and +12% in January alone. CoreLogic anticipates rent growth to continue to rise +6% by early next year.
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Thanks to ApartmentList, CoreLogic