Renters in America are fed up with rising housing costs and other expenses, such as food and energy. This comes after a record surge in these costs.
Rent prices are starting to slow down in many parts of the United States, after a years-long boom that made it difficult for many people to afford housing. With demand from tenants suddenly dropping, landlords have no choice but to ease up on big rent increases.
It’s a dramatic reversal from just a few months ago, when people were fighting over a limited supply of apartments. Now, in pandemic boom markets like Las Vegas and Phoenix, the application piles have thinned out and listings are lingering longer. Measures of US household formation have turned negative.
Many young people are choosing to stay with their parents or roommates instead of striking out on their own. For 18-year-old Coleby Hillenbrand, this means living in an apartment with multiple roommates.There are several reasons why young people are making this choice. For one, it can be more affordable to live with others. Additionally, many young people feel they need more support as they transition into adulthood.Whatever the reasons, it’s clear that young people are rethinking the traditional path to independence. And that could have implications for everything from the housing market to the economy as a whole.
Hillenbrand said that he was able to find roommates and make rent affordable. He said that people his age are not making enough money to afford rent on their own.
The US housing affordability crisis is only getting worse as mortgage rates rise, so any sign of a rental cool-off is welcome news. However, it’s also the result of economic turmoil as people struggle with rising costs of goods and services and stagnant wages. With a recession looming, the safe move is to stay put. For the Federal Reserve, an easing of one of its key inflation measures would be a positive sign.
Rents have increased significantly in recent years, far beyond what economic fundamentals would justify, according to Susan Wachter, a real estate professor at the University of Pennsylvania’s Wharton School. The Fed will not ease up on monetary policy until inflation slows down, which will require rents to start falling, she said. The sooner this happens, the better, and the more quickly it happens, the better, in order to provide relief.
Rents have been on the rise nationally, with a 7.5% increase in September from the previous year. This is above pre-pandemic levels, but down from the peak jump of nearly 18% at the start of the year. With fewer vacancies, this is a trend that is likely to continue. However, preliminary data for October shows a dropoff that is faster than the typical seasonal decline. If this trend continues, it would be the steepest month-over-month decline in data dating back to 2017, said Igor Popov, the listing platform’s chief economist.
Rents in the United States are now declining on a month-over-month basis. This is a reversal of the trend we’ve seen over the past few years, where rents have been steadily increasing.There are a few possible explanations for this change. One is that more people are buying homes instead of renting. This could be due to the fact that mortgage rates are still relatively low.Another possibility is that there is simply more rental property available on the market. This could be because more people are moving to areas where renting is more common, such as cities.Whatever the reason, it’s clear that the rental market is changing. This could have implications for both landlords and tenants. Landlords may need to adjust their prices in order to attract tenants, while tenants may have more negotiating power when it comes to rent.There has yet to be a cooldown reflected in the consumer price index (CPI) that the Federal Reserve watches closely. About a third of the CPI is tied to the cost of shelter, and last month saw a record annual pace of increase in rents. However, the CPI will change slowly to reflect more recent shifts, as it tracks what renters are currently paying as well as the costs homeowners would incur if they had to rent out their homes. This is in contrast to new leases, which are more likely to change in price.
According to Mark Zandi, chief economist for Moody’s Analytics, these indicators lag the actual market. This means that the more recent slowdown might not be reflected in the CPI for six or nine months.
Renters are feeling the effects of inflation more acutely than homeowners. While homeowners can lock in their mortgage payments for 30 years, renters can face annual (or even more frequent) rent increases. In addition, renters are more likely to have less stable jobs and incomes, making it even harder to keep up with rising costs.
According to an analysis by Zillow, the average American would have had to put in more than 64 hours of work in September to pay the typical monthly rent. This is just a hair below the August level, which was the highest in data going back to 2015.
The number of hours needed to work in order to afford the typical rent in the United States has reached a new record. According to a recent report, the average American worker would need to put in more than 60 hours per week just to cover the cost of rent.This is a troubling trend, as it means that workers are increasingly unable to afford basic necessities like housing. And it’s not just rent that’s becoming more expensive; the cost of living is rising across the board. This is putting a lot of financial pressure on American families.It’s time for our elected officials to take action to address this problem. We need to make sure that workers are being paid a fair wage for their hours, and that they can afford to live in decent housing. Otherwise, this trend is only going to get worse.
Rent prices have become unaffordable for many people in many markets, according to Jeff Tucker, a senior economist at Zillow. This has led to fewer people signing leases, as they cannot afford the prices. In addition, other inflationary challenges are making it even harder for people to rent, further shrinking demand.
Rental demand is slowing down the most in metropolitan areas such as Phoenix, Atlanta, and Las Vegas, where rent growth was especially dramatic in recent years, said Jay Parsons, chief economist for RealPage, a rental-data tracker.
Household formation is declining, sending apartment demand negative for the first time in many years, according to RealPage data. Tenants are leaving rentals at normal rates, but fewer are moving in, Parsons said. This problem is especially acute for young people. Rachel McIntyre Smith, a 25-year-old multimedia coordinator in Chattanooga, Tennessee, moved back in with her parents after her landlord raised the monthly rent on her one-bedroom by $200. “The last few months I was constantly thinking about how I was going to shrink my grocery bill or gas budget,” Smith said. “Now I can sleep better.”
The for-sale market has been struggling, which one would think would help landlords out since would-be homebuyers would need to find somewhere to live. However, rents have gotten so high that many people are instead looking for cheaper alternatives, like living with family, according to Apartment List’s Popov. And frustrated homesellers are listing their houses for rent instead, increasing the supply.
The following is a ranking of the metros with the slowest September rent growth:1. Baltimore, MD2. Chicago, IL3. Detroit, MI4. Newark, NJ5. New York, NY6. Philadelphia, PA7. Pittsburgh, PA8. Washington, DC
There is a slowdown in the rental market, with rents falling in 69 of the top 100 US cities in September. However, this slowdown varies widely by geography, and many markets are still quite heated. For example, rents in the New York, San Diego, Miami and Orlando, Florida, areas all jumped by at least 12% last month from a year earlier, according to Apartment List data. This is still a strong growth relative to pre-Covid levels.
Rents typically dip in the months leading up to the winter holidays. However, if demand doesn’t return by next spring, landlords could face serious problems, according to Popov. There’s a near-record number of newly-built apartments under construction and set to be completed, which will add to the rental inventory.
“The question is where is the economy in March, April, May, when people are normally out looking for apartments?” Popov said. “It’s hard to say, but we’re hopeful that things will start to improve soon.”
Cynthia Woodward is currently managing more vacant homes than at any other point during her 11 years as a Las Vegas property manager. Usually, out of the 130 homes she manages, only a few will be unoccupied. However, she now has a dozen vacant homes, including one that was broken into recently. The thieves left with a new washer, dryer, and refrigerator. Woodward noted that activity has been very slow lately. “Where are the people?” he wondered.