The hot housing market means hefty rent rises aren’t just hitting new apartments
Rents for Class B units rose faster than Class A in recent months
The rental market’s heat seems to know no bounds, as higher rents have hit older multifamily properties in recent months.
Rental marketplace Zumper analyzed rent growth between Class A units — generally newer and high-end — and units in older, more affordable Class B buildings. According to data reported by Bloomberg, rent growth in Class B units outpaced that in Class A units from March to October.
Two-bedroom Class B units saw a 12.8 percent surge in rent from March to October. Comparable Class A units marked an 11.5 percent difference.
The disparity among the rise in rents is even greater among one-bedroom units. Rent for the Class B apartments has soared 15.5 percent since March, while rent for similar Class A units has risen only 12.1 percent.
The accelerated rent rises in Class B buildings threatens lower-income families who rely on more affordable monthly payments. Many tenants have already been priced out of the housing market due to rising housing prices, forcing them to turn towards rentals.
The overall rental market is not much more inviting. In some areas, rentals are so hot that there are reports of bidding wars breaking out for apartments, a rarity in the housing sector usually reserved for the homebuying landscape.
The soaring rental market has been consistent for most of the country. In August, rents were on the rise in 30 of America’s biggest cities, the first time that had been the case since the onset of the pandemic. The national average rent hit $1,539 that month, a 10.3 percent increase from the previous year.
Single-family rentals aren’t getting any more affordable, either. Through the end of July, the average asking rent for a single-family rental was up nearly 13 percent year-to-date, the highest increase in five years.
[Bloomberg] — Holden Walter-Warner