National Rent Prices Rising Again
May’s asking rent prices and rent prices paid crept higher in May. In fact, both 1 and 2 bedroom reached new all time national highs again. That counters the notion that a cooling home buying market would translate to lower rent prices.
Renters keep asking when rent prices will fall, and about all that’s showing on the statistical radar is an easing of the growth in price. Rent price trends will enter the conversation at the upcoming NAA Apartmentalize Conference. You can still get tickets to that event happening June 22nd to 24th in San Diego. See more on who’s attending.
In fact, as this new data from Redfin shows, asking rents continue to climb. The reason for it might be:
- continued rental supply crunches
- renter preferences in units
- inflation for landlords (financing, materials, labor)
- renter unwillingness to move
- landlord debts from pandemic era continue
Apartment list’s chart below shows however that price rises may be moderating. As we know, rent prices don’t fall for a number of reasons over the long term. The supply crunch is sufficiently intense that it would take a sizable economic recession to improve the vacancy rate.
Landlords have suffered through a tough 2020 and into 2021, yet there is some good news for them and for property management service firms who serve them:
- rents are rising
- construction appears to be adding stock to the market, including built to rent developments
- rents are rising fastest in expensive cities
- pandemic stimulus money unspent may be used to help the rental market crisis
- stimulus funds spent specifically to clear rent in arrears
The price trends across the nation are diverse, however most large cities are seeing big price growth again. New cities and towns continue to see big price gains. Greensboro, Winstem Salem, Charlotte and Raleigh, North Carolina made into the top high rent growth list, with Greensboro having the highest increase at 5%. Home building, lifestyle choices, and migration are likely the key reasons. Renters like home buyers are shying away from dense, crime ridden urban areas.
Cities such as San Francisco are seeing poor price gains likely due to high taxes, regulations, crime, and the migration of businesses out of California and Silicon Valley to lower cost states.
Apartmentlist numbers show big rent trends in New York City, Los Angeles, Houston, Chicago, Dallas, San Antonio and Charlotte.
Special thanks to Zumper and Apartmentlist for the monthly reports which you can dig into more deeply on their websites. Both services agree on most trends, however take note of where they don’t.
Zumper Rent Report for May 2022
Median rents may be slowing. With recessionary talk, more homes for sale vacant, and construction improving, asking rents are likely to fall as landlords might refocus on finding good tenants rather than a price driven business model. With rental income levelling off, profit gains have to come from more efficient property management.
Read more on the single house rental market, apartment rental market and the national housing market.
Top Rent Price Growth, Zumper Estimates for May, 2022
Plenty of mid sized cities dominated the fastest growing list, with monthly rent increases in May above 5% in both one bedrooms and two bedrooms. North Carolina and Texas were pronounced in the top cities list below provided by Zumper.
|1 Bedroom||1 Bedroom||1 Bedroom||2 Bedrooms||2 Bedrooms||2 Bedrooms|
|Santa Ana, CA||$2,040||5.20%||19.30%||$2,870||5.10%||25.90%|
|San Jose, CA||$2,480||5.10%||13.80%||$3,070||0.70%||13.70%|
|Fort Lauderdale, FL||$2,060||5.10%||26.40%||$3,050||1.70%||38.60%|
|Fort Worth, TX||$1,230||5.10%||20.60%||$1,580||1.90%||15.30%|
|New York, NY||$3,590||5.00%||38.10%||$3,730||5.10%||38.10%|
|Los Angeles, CA||$2,360||4.90%||19.80%||$3,180||5.00%||19.10%|
|Oklahoma City, OK||$850||4.90%||11.80%||$1,000||1.00%||12.40%|
|Colorado Springs, CO||$1,150||4.50%||15.00%||$1,390||-2.80%||14.90%|
|San Diego, CA||$2,470||3.30%||30.70%||$3,100||1.60%||24.00%|
|Winston Salem, NC||$980||3.20%||12.60%||$1,060||1.00%||15.20%|
These were the top cities with the highest month to month growth in rent prices (May).
What’s the forecast for the second half of 2022? While the economy is enjoying a summertime renaissance, it is expected to cool by September with the Fed trying to fight inflation. Wages and commodity prices, along with rental financing costs will only rise as time passes. Landlords will have to keep rent price competitive, and much of the cream of the rental market could get blown off as 2022 passes.
Beyond this winter, it is difficult to forecast rent prices with precision. Too many political events could take place including international issues. It’s best that landlords and property managers focus on management excellence to ensure they’re ready for what may come in 2023.
See more research on the rental apartment market in the US. And discover more about the UK housing market and Australian property market.
With the ending of the pandemic, 2022 is looking good for landlords. During this lull in the action, it’s smart to test a more modern property management software. It’s easy and free.
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