July Makes Clear That Big Rent Hikes Are Coming to an End
National median rent is up 14% in July while consumers endure rising prices.
Expenses are rising on most everything for consumers – including renters – and they are not able to put as many dollars toward rent, according to a report last week from real estate brokerage Redfin.
The national median asking rent continued to rise in July – up 14% year over year to $2,032, the smallest annual increase since November.
On a month-over-month basis, the median asking rent climbed 0.6%, the slowest growth since February and down from a 2.1% increase a year earlier, Redfin said.
Redfin chief economist Daryl Fairweather said in prepared remarks, “Big rent hikes may finally be coming to an end as landlords adjust to waning tenant budgets that are being strained by the rising cost of groceries, gas and other regular expenses. Still, rents are increasing faster than overall inflation, which has started to ease.”
Fairweather added that he expects rental growth to continue to slow, but markets with strong job growth and limited new housing construction – such as New York and Seattle – will likely continue to experience large rent increases.”
Cincinnati Lone Market with a 30% YoY Rent Hike
Interestingly, the not-so-often mentioned Cincinnati market led rent spikes with a greater than 30% leap year-over-year.
Following Cincinnati were nine markets climbing 20% or more year-over-year: Nashville (26%), Pittsburgh (24%, New York City (23%), Newark (23%), Nassau County (23%), New Brunswick (23%), Seattle (22%), and Indianapolis and San Antonio at 21 percent.
Milwaukee and Minneapolis were the top two falling markets.
Class C Retention Rates Slipping More Than Expected
Last week, RealPage’s Jay Parsons noted that retention rates for Class C apartments “dropped more than expected” in July, GlobeSt.com reported, to end two percentage points down year-over-year to 58.1%.
And while “that’s still well above Class A and B (as Class C renters tend to be stickiest with fewest available alternatives) … it’s also a five-year low,” Parsons writes. Conversely, retention in Class A and Class B ticked down slightly and are above pre-pandemic levels.
RealPage also noted a few weeks ago that July rent growth was the strongest for a July in the past decade, other than in 2021, and that renewing renters paid 11% more in July, as reported by GlobeSt.com.