Overbuilding is causing rents in even the hottest markets to plummet, freeze

Minuscule 0.5 percent gain in U.S. rents over July was the smallest increase since 2012

TRD NATIONAL /
Sep.September 09, 2018 01:00 PM

(Credit from left: Henk Monster, Wikimedia Foundation)

Timing is everything.

It’s a great time to be renting in America as a glut of new supply is causing rents across the country to take a nosedive. Meanwhile, the lag time between the planning and delivery of rental projects is hurting developers and landlords who are now feeling the crunch.

But the signs were there for the past few years, as Zillow’s senior economist Aaron Terrazas explained to Bloomberg.

“This is something that we first started to see two years ago in New York and D.C.,” he said. “A year ago, it was San Francisco and most recently, Seattle and Portland. It’s spreading through what once were the fastest growing rental markets.”

Best case, rents freeze, however in markets where the slowdown is more advanced, like New York, prices are falling. In the Big Apple this past July, Bloomberg reports rents declined 0.4 percent. The result, as The Real Deal has reported, is a rental market full of concessions, particularly in high-end developments.

“There is tremendous competition for tenants,” Seattle landlord Vulcan Real Estate’s spokesperson, Lori Mason Curran, told Bloomberg–though she noted the company’s expectation that the current market conditions wouldn’t last. “Over time, we think long-term demand is solid. But there is so much supply tamping down rent growth right now.”

According to Terrazas, most of the newly-opened rental buildings were first put into motion when yearly national rent gains were hitting 6.6 percent; that environment fueled the largest surge in rental construction in about three decades. [Bloomberg]Erin Hudson


Related Articles

arrow_forward_ios
U.S. home prices rose with Phoenix, Seattle and San Diego logging the biggest gains (iStock)

US home prices jump 5.2% in August

US home prices jump 5.2% in August
An estimated 12.8 million Americans would owe an average of $5,400 from missed payments (iStock)

Rent debt could reach $70B by year’s end: Moody’s

Rent debt could reach $70B by year’s end: Moody’s
19 Strong Place and 161 Warren Street (Google Maps, iStock)

Brooklyn’s luxury market has best week since before the pandemic

Brooklyn’s luxury market has best week since before the pandemic
14 East 11th Street and 21 East 61st Street (StreetEasy)

“Bidding war”: $28M townhouse tops luxury deals in Manhattan

“Bidding war”: $28M townhouse tops luxury deals in Manhattan
(iStock)

New home sale prices rise but buyers are hanging back

New home sale prices rise but buyers are hanging back
Abandoned malls are being turned into senior housing, giving planners a chance to rethink retirement communities (iStock)

Abandoned malls get new life as senior housing

Abandoned malls get new life as senior housing
Beneath wall to wall carpeting, brokers find herringbone flooring, behind a coat of paint may be a marble mantle, or hidden away could be antique mirror doors. (iStock)

Hidden treasures: Old homes offer up surprises when readied for sale

Hidden treasures: Old homes offer up surprises when readied for sale
Ronnie Wood and his London home (Getty, Milton Stone)

Rolling Stones guitarist Ronnie Wood lists colorful London townhouse

Rolling Stones guitarist Ronnie Wood lists colorful London townhouse
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...