Apartment rents nationwide fell for the fourth consecutive month based on a National Apartment Rent Index (not seasonally adjusted), and were down in 51 of the 100 largest U.S. cities in the latest month compared to one month earlier according to Apartment List, a national online apartment listing service.
A frequently quoted statistic is the U.S. homeownership rate, which at 63.5 percent as of Q3 2016 was down from the 69.2 percent peak in 2004. Now look at the mirror side of that metric. The percentage of households that are renters in the U.S. increased from 30.8 percent in 2004 to 36.5 percent in Q3 2016 – an 18.5 percent gain. Thus rental rate changes today have an even greater impact on the U.S. economy than any time in more than one-half a century given the 105 million apartment dwellers today.
Following the implosion of the housing bubble in the U.S. in 2008, new residential construction plummeted. After issuing building permits for almost 2.2 million total dwelling units in 2005, just 585,000 units were permitted in 2009, a 73 percent decline. The past three years, however, have seen more than 1 million total dwelling permits issued annually. Annual permits are shown since 2000 in the following table, with 2016 being the 12-months ending November.
Some markets Overbuilt since the recovery from the downturn, others Underbuilt and some are Just Right. To view the relationship between supply and demand take a look a Jones on Real Estate Blog from 2016 that details total new residential building permits versus net new job creation click http://blog.stewart.com/stewart/2016/08/17/the-three-bears-paradox-on-an-msa-level-jobs-and-residential-permits-2012-to-q2-2016/ As usual, invoked is the TINSTAANREM clause — There Is No Such Thing As A National Real Estate Market. This applies to rentals also.
Which apartment markets in the U.S. are the most expensive? Apartment List shows the following, ranked by two-bedroom rents, out of the 100 largest U.S. cities as of January 2017:
Another metric reported by Apartment List is the top-10 metros with the greatest rental rate increase in the prior 12 months.
To read the entire study from Apartment List including rental rates for one- and two-bedroom apartments plus year-over-year changes in the 100 largest cities click https://www.apartmentlist.com/rentonomics/national-rent-data/
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Just one-year ago many so-called experts were lamenting rents would continue to escalate for years, but Things Change. It’s all about supply and demand. As the Apartment List study points out, seasonality also comes into play.
Things Change.
Ted