"The Rent Is Too Damn High"
Since 2020, shifting demographics and demand for housing has upended the rental market.
The pandemic jolted housing ownership and rental markets. Entry level single family homes (homes with 1,400 square feet or less) are not as prevalent as they once were, millennials -- and many other first time homebuyers -- are reported having difficulty in the market. According to RedFin, home prices were up 14.1% in January 2022 compared to last year, selling for a median price of $375,851. This has left many continuing to rent, looking for opportunities, and contributing to high demand for apartments and other housing rentals.
Rents are also soaring: In January, rental costs reached new heights. Despite increasing mortgage rates and a still simmering housing market, renters on the move drove up home buying activity.
According to Realtor.com, in January 2022 "renters earning the typical household income devoted 29.7% of their income to lease a typical for-rent home(vs. 24.8% in January 2021)." The same report noted markets where renters suffered the highest cost burdens in January 2022 were Miami, FL, followed by Los Angeles, CA, and Riverside, CA, which all saw an average rent share above 45%.
This is a major problem for cities and states, as housing affordability is becoming increasingly difficult for lower and middle-income earners. Proposals to increase the housing supply, particularly multi-family housing, are gaining momentum; but it takes time to build.
California’s Senate Bill 9, which took effect in January, circumvents local zoning rules by allowing owners of single-family homes to split their properties into two lots and build two units on each. Bloomberg
This week’s digest looks at some of the issues in the rental market and what others are saying.
New York City Rents in Focus
Rent spikes in NYC to nearly double national average Denver ABC 7
New development squeeze will push city rents higher Crain’s New York
Rents in Other Cities
Some Rental Policies Under Consideration
CHART OF THE WEEK
Some of the major growth in rents is occurring in Sun Belt cities. Florida’s Tampa and Miami metropolitan areas are among the largest increases in the U.S. However, growth within the Sun Belt is not a pandemic phenomenon. Of the top 10 most populous U.S. metro regions, seven are in the Sun Belt: Los Angeles, Phoenix, Dallas-Fort Worth, Houston, Miami, Atlanta and Phoenix. However, Sun Belt cities are starting to losing their affordable edge.
Texas' population growth is the fastest in the country. And while Houston is one of the most expensive rental markets in Texas, it’s still more affordable than Dallas and Austin. Over the past decade, the state's population has increased by more than 4 million people, most of whom have moved to the major metropolitan areas.
Key Takeaway: Home prices spiked to an all-time high of $363,975 during the four-week period ending February 27 — the median home-sale price was up 16% year over year.
Any opinions expressed herein are those of the author and the author alone.