Photo: Robert Clark
Average rents rose at their fastest pace in 18 months in August, as a low level of inventory kept upward pressure on prices and competition heavy among renters.
“Slow inventory is causing prices to rise at an above-average pace in hot markets like Las Vegas, Nevada and Fresno, California, which have not fully responded to increases in demand,” listing site RentCafe real estate researcher Nadia Balint tells Livabl.
National rents rose 3.1 percent year-over-year to $1,412 in August — a new all-time high. Rents were up in nearly 90 percent of the country’s largest 252 cities, and declined in just 1 percent of cities compared to August 2017.
Prices are soaring in the New York City borough of Queens. The average rent in Queens jumped 8.4 percent year-over-year to $2,342 — still below Manhattan’s commanding $4,119 average rent and Brooklyn’s rising average rent of $2,801.
Manhattan may be the priciest real estate market in the country, but price growth is slowing. Manhattan rents rose less than 2 percent year-over-year in August.
“Cooling markets like Manhattan are among the slowest growing due to larger inventories of apartments that came on the market in previous years and this year, and stable demand,” says Balint.
A surge in population growth has elevated rents in Phoenix, Arizona, where the average rent was up nearly 7 per cent. Yet, even with average prices growing at an annual rate between 6 and 7 percent, Phoenix rents remain relatively affordable at $996 per month compared to similar large cities throughout the country.
Similarly, Las Vegas is seeing a boom in population growth, but housing construction is falling behind local demand and elevating prices. The typical Las Vegas apartment costs $1,011 per month, up 6.2 percent from August 2017.
“The apartment construction rhythm has slowed down nationwide this year, generally because of increases in building costs and a shortage of labor, not necessarily as a result of it catching up with demand, although that may be the case in some markets,” says Balint.
Meanwhile, rising national home prices are forcing some Americans to postpone homeownership indefinitely, thus further fueling the demand for rental units.
And while the temperature of the US rental market is categorized as “temperate,” renters shouldn’t expect to see prices budge this fall.
“Renters will see a slight seasonal slowing in the average annual increase, keeping in mind that rent prices are closely tied to the availability of supply and the local job markets,” says Balint.
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