Rents Are Coming Down But Not Enough To Bring Immediate Relief
The last few years have been difficult for renters, landlords and multifamily investors alike.
With the winter months typically seeing a halt in rent price increases because the home market tends to freeze at this time of year, what is happening now is unprecedented. But don’t expect to see renters have any significant relief anytime soon.
The fourth quarter of 2022 is now labeled as the period of the three biggest month-over-month declines in the history of Apartment List’s national rent index, which started in 2017. The national median rent in the U.S. still increased by 3.8%. It’s a relief that the jump is minimal compared to the same period a year ago. Prices are falling slightly in 90 of the 100 largest markets Apartment List covers, with New York City leading the declines. Meanwhile, the Midwest lead the nation in rent hikes.
Zillow Group reported similar numbers, with the Seattle area having the highest rents in the country and seeing the most significant monthly declines, though typical rentals are still up by more than $100 a month compared to last year. Rents in Las Vegas were down 0.9% and Dallas down 0.8%, with rents nationally falling 0.3% from November to December. Those numbers will not inspire most renters to start new college funds for their kids.
One of the issues plaguing rent prices is that landlords and multifamily home investors are still digging themselves out of the hole caused by pandemic eviction moratoriums, according to Detroit attorney Matthew Paletz, who represents landlords in the Midwest.
"They were crushed by almost two years of federal and state moratoriums and are still playing catch-up," he said. “It’s also not a mere coincidence that landlords have had to increase rents over that time period to keep pace with increased operating costs.”
Rents increased by 17.1% in February last year. So a minimal drop of around 1%, though welcomed, will not make a lot of difference to families financially locked out of opportunities to buy homes in a market that has seen escalating mortgage interest rates.
Rents are still higher than they were a year ago in all top 50 metro areas except Las Vegas, according to Zillow, which reports that although rent price increases have cooled in Seattle, they’re still up $102 from the same period last year.
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