Home sales have dropped, while home prices and mortgage rates have soared. The rental market isn’t so hot either.
The bad times continue to roll for the housing market.
In recent months, home sales have dropped, while home prices and mortgage rates have soared. News about the rental market isn’t so hot either.
Rental information service Zumper’s National Rent Index hit a record high in July. The median one-bedroom rent totaled $1,450 in the month, up 2% from June and 11.3% a year earlier. The two-bedroom median rent hit $1,750 in July, also up 2% from June and up 9.3% from July 2001.
Cross-currents are flowing through the rental market, according to Zumper’s rent report. It notes that consumer prices are rising at the fastest rate in 40 years, while wages trail far behind.
Meanwhile, “as consumer-packaged-goods companies and property owners make clear their intention to continue raising prices, home-buying demand is decreasing,” the report says. That’s happening “even as our country faces an ongoing housing shortage.”
Leaving the Market
Further, “thanks to rapidly increasing interest rates (and more rate hikes predicted), many would-be buyers are opting out of the market, creating additional demand for rentals,” the report said.
“Yet renters are holding out for deals, choosing more affordable neighborhoods, bringing in roommates and even moving back in with parents in order to save money.”
All that adds up to a “head-scratching reality for the rental industry,” the report said. “Some property owners have become accustomed to double-digit percentage hikes and will continue chasing these inflated prices for as long as they can.”
The factors of strong demand and undersupply are pushing prices higher too, the report said. “But the fear of recession is real, and many renters are making lifestyle sacrifices so they no longer have to fork over 50% or more of their income on housing.”
Rents Seen Rising Further
Bottom line, says Zumper Chief Executive Anthemos Georgiades: “rent prices will keep climbing across much of the country, but the stratospheric price hikes we saw throughout much of the pandemic will likely slow as consumers continue to tighten their wallets.”
The biggest month-over-month rent increases for July came in
1. Greensboro, N.C. One-bedroom rent soared 6% to $1,060.
2. Providence, R.I. One-bedroom rent also jumped 6% to $1,780
3. Nashville, Tenn. One-bedroom rent climbed 5.9% to $1,790.
4. Urban Honolulu, Hawaii. One-bedroom rent also rose 5.9% to $1,620.
5. Durham, N.C. One-bedroom rent gained 5.8% to $1,270
“We continue to see steady price increases in every major city in both Tennessee and North Carolina,” the report said. They have been rising for two years.
“Migration to these areas – with their modest tax rates, relatively low cost of living and outdoor-friendly lifestyle – shows no sign of slowing down.”