The costing of renting is rising all across the country. Many metro cities are booming with rent rates and people are not happy.
Over the last 3 years, the cost of renting properties has risen by about 4%. It is a situation that has many tenants stressed out. The question is, when will it stop? This month marks the second consecutive month of the year that renting prices have fallen. Is this a good sign? The answer is; it’s too early to tell. The chart on the right demonstrates the percentage of growth in the United States from 2014-2017.
We see in the chart that it is a very dramatic change that many people were not expecting.Rental activity is generally slower in the fall and winter months, and it’s typical to see rent growth taper off at this time of year due to that seasonality.To clarify, the decline that we’re seeing is a bit starker than we would have expected. Rent growth from January to August outpaced the average over the past three years by 0.5%, but rent growth has now turned negative at a time when it is normally flat.
Despite the decrease over the past month, rents are still up 2.7 percent year-over-year at the national level. Year-over-year growth continues to fall between the 2.1 percent rate from this time last year and the 3.4 percent growth rate from October 2015. Rent growth is pacing slightly ahead of the overall rate of inflation, which stands at 2.2 percent as of the latest data release. On the other hand, average hourly earnings have grown slightly faster than rents with a 2.9 percent increase over the past twelve months — a promising signal after years of stagnant wage growth.
Rents down month-over-month in 73 of 100 largest cities
The drop in rents at the national level is being mirrored in many of the nations biggest markets. Furthermore, despite the seasonal slowdown, rents are still up year-over-year in 89 of the 100 largest cities. Note that rents declined month-over-month in 73 of the nation’s 100 largest cities, whereas last month only 49 cities saw rents fall and in September only 23 cities saw rent decreases. This decrease in rent rates is, good for the moment, and it would be great if they would lower to a more reasonable rate. But just remember, there is always a calm before the storm.
In addition, no matter how good a deal you have on your rent, eventually you’ll hear about someone who has it better. And then just when you start to feel bad for yourself, you’ll meet someone who’s paying an arm and a leg for a place much smaller than yours. When you think about the wide range of rents in your city, you’ll start to wonder; how do landlords figure out how much to charge? Here is this, Unless an apartment is rent-controlled or rent-stabilized, a landlord needs to set rental rates high enough to cover the apartment’s expenses. And there are a lot of expenses. Some owners have mortgages on those properties and those who don’t are taking advantage of a market that is in their favor.
If you’re thinking of buying a home or looking for a new and improved place to rent, please contact Premium Properties Real Estate Services at (407) 380-2800 or visit www.premiumproperties.com for more information.
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