US Rent Growth Is Slowing, But Burden Remains For Many Tenants Real Estate News, ET Real Estate

Los Angeles: The cost of renting an apartment is coming down after skyrocketing in recent years, though it remains painfully high for many Americans.

The US median rent rose 2.4% in January from a year earlier to $1,942, the lowest annual increase since June 2021, according to rent data that tracks listings for apartments and rental homes.

The median rent peaked in August at $2,053, compared with an annual rate of growth of nearly 18% last March, according to Rent. On a monthly basis, January’s national average rent was down about 2% from December, the company said, marking its fourth decline in five months.

After rising in 2021 and most of 2022, rent growth is beginning to normalize amid slowing demand and increased competition from new apartment construction, which has put pressure on landlords to moderate rent increases.

“It’s inventory, the fact that rents are high, a lot of people are unsure about the economy and are just staying put, not moving as much,” said John Leckie, a rent researcher.

Even with the reduction in rent growth, the sharp increase in recent years has eaten into the budgets of tenants, a major chunk of their income.

The national average rent-to-income ratio reached 30% in the fourth quarter moody’s Analytics. The ratio was the highest in the more than 20 years that Moody’s has been tracking it.

Households that pay 30% or more of their income on rent are considered “cost-burdened” by the US Department of Housing and Urban Development.

“As the disparity between rent growth and income growth, Americans’ wallets feel the financial crunch, as wage growth trumps rent growth,” Moody’s economists wrote in a January report.

The trajectory of rent growth becomes less uniform when looking at specific metropolitan areas. Rents have risen sharply in many metropolitan cities in the Southeast and Midwest amid an increase in the number of people moving there from the West and Northeast, where housing becomes more expensive.

Average Rent in Raleigh-Carrie, North CarolinaThe metro area rose 22.5% in January from a year earlier, while in Cleveland-Elyria, Ohio, it rose 17.5%, according to rents.

Among the metros where median rent fell the most in January compared to a year earlier: Phoenix-Mesa-Chandler, Arizona, down 6.7%, and Oklahoma City, down 6.3%.

It is unlikely that rents will fall sharply nationally, as demand for housing remains strong and high mortgage rates have dampened the housing market for purchases, causing many potential homebuyers to continue renting Forced to keep

Leckie said, “What’s going to happen is when we get back into the warmer months people start moving again and you’re going to see the demand that we lost over the winter come up and that drives prices up again.” will increase.”