For most of the pandemic, renters had it just as bad as home buyers, with rents soaring in sync with home prices.
But good news is starting to emerge for renters. Apartment rents slid 0.59% in November, according to RealPage, which provides services for owners of rental properties.
That annualizes to 7.3% and represents the third biggest monthly decline since 2010. It was exceeded only in April and May of 2020, when the covid pandemic began raging.
Rents have slid 1.28% over the past three months, and that cumulative drop also is the largest since 2010, except for the 2020 lockdown period.
Rental occupancy eased to 95.1% in November 2022 from 95.3% in October and 97.5% a year earlier.
“Interestingly, the issue is not renter turnover,” wrote RealPage chief economist Jay Parsons. “In fact, turnover in November 2022 was the second-lowest for any November on record, topped only by November 2021.”
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Renters Stay Away
However, “the issue is at the front door,” he said. “Leasing traffic among prospective renters has plummeted throughout 2022, and November 2022 ranked as the weakest for any November in eight years.”
Bottom line: “there is very little net new demand for any type of housing right now, despite strong growth in jobs and wages,” Parsons said.
“We’ve never before seen new-lease apartment demand freeze up during a period of solid job gains like it has this year. We’re on track to end 2022 with the weakest net apartment demand since 2009. Low consumer confidence and weak household formation tells us Americans are in wait-and-see mode.”
Rent growth for new leases registered 6.5% in November, the lowest since June 2021.
“Among metro areas, sizable cuts came in markets of all types,” Parsons said. “Destination hotspots of Fort Walton Beach, Fla., and Boise, Idaho, led the nation with month-over-month cuts around 2%.”
Looking at larger cities, San Jose, Calif., posted the nation’s deepest month-over-month cut in November at 1.7%, as technology companies slashed staff. Bay Area neighbors San Francisco and Oakland also saw reductions of more than 1%.
Other major cities with rent reductions of more than 1% included Raleigh/Durham, Austin, Charlotte, Seattle, Phoenix, Tampa, Las Vegas and Denver.
Home Prices Sliding Too
Home prices have been sliding too. The median price for existing-home sales totaled $379,100 in October, down 1.5% from $384,800 in September and 8.4% from a record high of $413,800 in June, according to the National Realtors Association.
But the latest figure is still up 6.6% from $355,700 in October 2021. And the 30-year fixed mortgage rate averaged 6.49% in the week ended Dec. 1, up from 3.11% a year earlier, though it's down from recent highs.
So buying a home may well cost you a lot more than renting. If you want to ultimately buy a new house, you may want to rent for now and wait for home prices and mortgage rates to fall further.
