ATLANTA — After several years of paying ever higher rents, there are signs that the pace of apartment cost increases may be slowing.
But for many renters, the pain of higher prices is already a fact of life.
“Rents are up about 25% (nationwide) from three years ago,” said Ryan Coon with Realtor.com. “Think about that.
“That’s a big big increase,” Coon said. “We are starting to grow slower, but we are still growing faster than wages.”
Realtor.com - which is one of the most popular sources for information about home sales - is launching a new monthly U.S. rental report.
In September, overall housing rents were 7.8% higher than a year earlier.
“It’s the slowest growth that we’ve seen in that year-over-year number in 16 months,” Coon said at a meeting of the National Association of Real Estate Editors.
Nationwide median rents of apartments, houses, condos and townhomes were $1,759.
In the Dallas-Fort Worth area, overall median rents were up 8.8% year-over-year to $1.596, according to Realtor.com’s new numbers.
And at the end of September, average apartment rents in North Texas were at a record $1,540 — up 13.4% from a year earlier, according to RealPage.
Across the country, renters are digging deeper to keep a roof over their heads.
“Currently households are spending about 26.5% of their monthly income on rent - that’s a lot,” Coon said. “That’s actually up about full percentage point from where it was in August of last year.
“These households are feeling some pain.”
And moving to cheaper digs may not be an option, even if you can find a lower-priced property.
“The people who who are staying and renewing the lease are spending about $160 more a month,” Coon said. “If they decide to move - for work, they need a bigger space, they have a family, whatever, the rent actually goes up $300 a month.”
And increases are coming an an even faster rate in the big urban markets, Realtor.com reports.
September’s biggest annual rent gains were in Chicago (+23.9%), Boston (+19.9%) and New York (18.2%),
Coon said urban markets that are dominated by big tech companies are seeing some of the the greatest rent growth.
“The fastest growing rents are actually in the big urban settings,” he said. “We think that’s being driven many by COVID concerns waning and urban markets reopening, offices reopening and some return to work.”
In Texas, the Austin area had the highest median rents last month at $1,725. D-FW had the biggest percentage gains.
With home purchases declining, competition for rental housing is ramping up as higher mortgage costs lock out buyers.
“It’s pushing people from the for sale market over to the rental market,” Coon said. “What we’ve seen in just the last nine or 10 months is a steep decline in the number of existing home sales.”
North Texas preowned home sales were down year-over-year by 17% last month.
And starts of new houses in the D-FW area were cut by more than a third in the most recent quarter.
“Vacancies are at all time lows - both on the for sale and rental part of the market,” Coon said. “It’s driven by a lack of supply - a lack of building going on.”
The D-FW area has led the country with more than 63,000 apartments being built and annual single family home starts of more than 50,000.
But supplies of housing in the area remain stretched. And shortages could grow if builders cut back because of higher interest rates.
“There is new construction happening, but unfortunately you can’t just snap your fingers and have a new home or apartment building,” Coon said. “It will take some time for all this new supply to come on line.”
