Rent costs are starting to drop after hitting record levels this summer, but experts say it’s uncertain whether that trend will continue.
Christopher Meyer, professor of real estate at Columbia University’s business school, said those looking to rent an apartment now may have a better experience than they look in May or June.
“You’re not seeing a rapid increase in rental prices, the rental market is loosening up a little bit,” Meyer said.
According to a new report from Redfin, the national average rent increased by 14% in July compared to the same month last year, the smallest annual increase since November 2021. Although this percentage is still high, it is less than 15% in June and 16% in May.
Experts say that the market may stabilize a little more by the end of this year, but there is still a lot of uncertainty.
“I wouldn’t be surprised if we get to 2023 before we level off,” said Brian Carberry, managing editor of the redfin apartment search website Rent.com.
A lot of this depends on where you live. Florida cities, such as Boca Raton and West Palm Beach, have seen rents decrease by -0.1% and -0.5%, respectively, over the past month. According to “Apartment Listing,” rents in cities like San Diego on the California coast have continued to rise over the past year.
In Rochester, New York, rent was up 15.3% in August compared to the cost of rent in the same month last year, according to apartment listing data. The average two-bedroom apartment price in the Rochester area was $1,318 in August, compared to $1,116 a year ago.
Bank of America CEO Brian Moynihan said higher rent costs are concerning because they represent a large portion of household spending.
“Gasoline prices are going down, but rents are up 10, 12, 15%. And rents can withhold about 40% of families’ wages,” Moynihan said in a recent interview with The Associated Press.
The mayor said things are looking better than they were a few months ago, but the market is still in favor of landlords.
If your lease expires, it may be better to renew your lease and negotiate your rent with your landlord, at least until the rental market stabilizes, according to the Association for Market Research. Paula Munger, assistant vice president, said.National Apartments.
“When you renew your contract, you’re not going to pay the same amount as someone who just came in,” Munger said. “If you can, stay in your apartment.”
One of the reasons for the increase in rent has been the increase in demand from the housing market.
The market has begun to calm down, which could mean that more people will be able to buy homes rather than rent. However, with the rise in interest rates, some people may decide not to buy the mortgage.
“With current inflation across the market, there may not be enough supply, so prices go up,” Munger said. “That’s the downside for consumers, they don’t have enough choice about what they want to rent.”
It was the experience of 22-year-old Los Angeles-based Erica Tuscan, who had previously been living with friends but wanted to find an apartment with her boyfriend.
After moving into more than 10 apartments, the couple settled on a 500-square-foot one bedroom in Beverly Hills, where they pay $2,750 per month. According to data from Jumper, the median rent for a one-bedroom apartment in the area is $2,773, up 14% from a year ago.
“I think landlords are taking advantage of people,” said Tasco, who currently pays $200 more a month than his previous apartment.
In Brittany Essler’s case, the high demand meant she had to fill out her rent application to beat out 10 other people who moved to the apartment she wanted.
Essler, who lives in North Park, said, “Since everyone is in scarcity mode, you want to find an apartment that is more or less affordable, but unfortunately you have to ignore chipped floors or an appliance that doesn’t work.” does.” Neighborhoods from San Diego.
Real estate developers have ramped up building construction this year, which may help dampen demand. But it is likely to take time before it appears on the market.
Meanwhile, high rent prices disproportionately affect low-income residents across the country, said Ben Martin, research director at Texas House, a nonprofit organization that works to end housing injustice.
Rental prices in Dallas and Fort Worth rose 21.6% in May compared to a year earlier, according to data from Redfin. In Austin, they were up 48.5%. One of the main reasons for this increase was that affluent residents of coastal areas like California or New York moved to Texas during the coronavirus pandemic when they realized they could work and live cheaper online. For example, in December last year, Tesla moved its headquarters from Silicon Valley to Austin.
“The people who earn the lowest wages are paying the most in proportion to their wages,” Martin said. “Which means they don’t have money for other expenses like school, school supplies, gasoline, clothes and all the necessary things to live.”
Martin said that apart from cutting basic expenses, renters are also opting to live more per apartment.
More and more people are unable to afford their home and are facing eviction. State governments have ended the suspension of eviction and rental assistance programs that help people stay in their homes during the pandemic.
Eviction Lab, a research organization at Princeton University, is seeing a large number of evictions that have exceeded pre-pandemic levels.
In Houston, where the evictions moratorium ended in July 2021, there were 7,242 evictions in July this year, which is 51% higher than the average, according to Eviction Lab. Other cities, such as Los Angeles, have extended the moratorium on evictions until the end of the year. ,
Tenants who cannot afford the increase in rent, but are also unable to relocate, have been forced to choose between paying their rent or meeting their basic needs. Evictions are reflected in the tenant registry, making it more difficult to find housing in the future.
Nick Gretz, a postdoctoral researcher at Eviction Lab, said, “The threat of eviction is a growing problem. Renters have sacrificed many other things to pay such high prices every month, because they are in constant danger of being thrown out of their homes. will be fired.”
The Associated Press receives support from the Charles Schwab Foundation to create educational and interpretive journalism with the goal of spreading financial education. The Foundation is independent of Charles Schwab & Company Inc. Associated Press is solely responsible for its journalistic work.