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Apartment rental prices across US slow after years of steady growth: report
Increased supply and more concessions from landlords may have been contributing factors
Tenants can rejoice. Landlords? Not so much.
Apartment building owners across the country may be seeing the end of record rent growth, according to new nationwide data.
Prices on multifamily rents ticked up just 2.3 percent in the second quarter year-over-year, the smallest increase since 2010, according to RealPage Inc. The findings were reported in the Wall Street Journal, and attributed in part to the increase in supply that has hit the market. Developers are on track to add 300,000 new units across the country.
In the second quarter, developers completed more than 75,000 market-rate apartments across the country’s 150 largest metros during the second quarter, according to RealPage.
Average annual rents have seen steady gains for years, growing for 32 straight quarters across the country. But that trend has slowed to a near halt in some major markets, including Chicago, which grew a tenth of a percent year over year. Other cities that saw little to no growth included Portland, Austin and Seattle.
Annual rent growth in the Miami and Los Angeles areas were above the average nationwide at 3.5 percent and 3.2 percent, respectively. New York saw a 1.3 percent increase from the second quarter of 2017.
Also contributing to the slowdown were concessions, which have become more common in recent years. Landlords will offer several months of free rent or other financial incentives to tenants, which lowers the effective cost of living but allows landlords to keep “face rents” high.
That’s the case in two of the hottest markets in the country: Brooklyn and northwest Queens. The amount of deals with concessions peaked in those markets in April, at 51 percent and 65.1 percent, respectively. That percentage has since dropped, however. There tends to be more demand in the spring and summer months than the winter.
Another factor: Demand could be waning as millennials get older, start families and seek single-family homes instead of apartments in multifamily buildings. [Wall Street Journal] — Dennis Lynch