Study: Rent Increases Slowing as More Supply Hits the Market
More of the largest metropolitan areas posted monthly declines in rent, further proof that the rental crisis is easing across the nation, according to researchers at 抖M女仆 and two other schools.
In October, 68 housing markets had smaller average rental rates, up from 38 in September. Springfield, Massachusetts; Austin, Texas; Seattle and New York are among the metros where rents are falling. The U.S. average rental rate was $2,040, down 0.9 percent from September.
鈥淚t seems that an increase in supply helped relieve the pricing pressure on rental units around the country 鈥 and that鈥檚 exactly what had to happen,鈥 said , Ph.D., an economist in 抖M女仆鈥檚 . 鈥淭he added supply appears to have come from delivery of units under construction, an increase in unit density and the conversion of many Airbnb-type units to long-term rentals鈥
Despite the slowdown, rental rates remain elevated in some markets, particularly Florida. Cape Coral-Fort Myers led the U.S. in both the largest year-over-year rental increase (17.16 percent) and the largest premium (17.37 percent). A premium is the amount above the long-term leasing trend that renters must pay. Rents typically increase only 3 to 5 percent a year.
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Most Florida rents are declining month over month, but Cape Coral-Fort Myers posted a 1.76 percent increase in October.
鈥淭he significant rise in Cape Coral-Fort Myers is very disheartening, though not surprising,鈥 said , Ph.D., of Florida Gulf Coast University鈥檚 . 鈥淭he monthly index report is highlighting the ongoing cost of Hurricane Ian. There are signs of a recovery, but affordable housing should remain an issue in this market for months to come.鈥
Las Vegas posted the nation鈥檚 smallest annual rental increase at 1.58 percent, while Minneapolis had the smallest premium at 1.03 percent.
, Ph.D., of The University of Alabama鈥檚 , said the national data reveals that much of the large rental increases are coming from six and 12 months ago.
鈥淲ithin the past month or two, rents are slowing and returning to a more normal year-over-year trend,鈥 he said. 鈥淚t鈥檚 clear that much of the country is starting to shake off these large increases, which have been so devastating to consumer budgets.鈥
The researchers use leasing data from Zillow鈥檚 Observed Rental Index to determine existing rents and statistically model historical trends from 2014. The Waller Weeks & Johnson Rental Index covers the entire stock of homes and apartments. 聽
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