Photo: Robert Clark
The US rental market is poised to end the year on a positive note, with further growth anticipated in 2019, according to a new report by the listing site RentCafe.
“Healthy job creation, a robust economy, and positive demographic trends are promoting the formation of new households and stimulating demand for rentals,” said Doug Ressler, director of business intelligence at Yardi Matrix, in a statement.
RentCafe used data provided by Yardi Matrix.
At the national level, the average rent rose 3.1 percent year-over-year to $1,419 in December, or $42 above what renters were paying this time last year.
The average cost of a rental apartment began seeing annual increases above 2.5 percent in February 2018, and reached the highest month-over-month growth rate in May 2018 (0.8 percent). National average rents peaked at $1,422 in September 2018.
“Favorable economic factors in 2018 and rising interest rates, which can cause delays in home-buying, helped push rental costs upwards at the year’s end,” reads the report.
Rental costs have seen the most fluctuations in smaller American cities throughout 2018.
In fact, the top three highest year-over-year rent hikes in 2018 took place in small cities, with double-digit percentage increases in Odessa, TX (21.8 percent), Midland, TX (21.4 percent), and Reno, NV (10.2 percent).
Odessa and Midland both saw price fluctuations more than twice as fast increases as any other city — large or small.
“Consumers in search of cheaper living options have had a big influence this year on what the top of the largest cities looks like in terms of rent growth,” reads the report.
Queens, NY was the only large market with stagnating rents in 2018, with the average rent declining a modest 0.2 percent year-over-year in December. But with Amazon moving into Long Island City next year, the borough’s overall housing prices could spike in response to increased demand for housing.
Across the river, rents in Brooklyn fell by 1.7 percent annually at the end of 2018. And of the country’s largest cities, Brooklyn recorded one of the slowest pace for price growth this year.
Meanwhile, the keywords “cheap apartments” accounted for more than 25 percent of rental-related searches in 2018, closely followed by “studios” (23.88 percent), illustrating that the primary interest in rentals was driven by what the report characterizes as “a cost-conscious mindset” this year.
One-, two- and three-bedroom apartments followed with 10.48 percent, 9.46 percent and 7.5 percent of all rental-related searches in 2018, respectively.
Looking ahead, Ressler anticipates that vacancies will likely “remain low and even decline” in most markets, with the overall rental market on target to post even stronger growth in 2019 than it saw this year.
Rising interest rates and home prices in the for-sale market are likely to keep many prospective buyers in the rental market longer, fueling “further growth in the demand for rental apartments in the new year.”