After more than a year of record run-ups in apartment rents, growth is starting to cool off, a trend that could help housing affordability and ease the rise in overall inflation, according to several market measures.
Nationally, average apartment rents rose 9.4% in the second quarter of 2022 compared with the same quarter in 2021, according to data firm CoStar Group. While that is high by historical standards, it is down from the more than 11% annual increases seen the previous two quarters, CoStar said.
The decline also comes at the time of year when the rental market is typically at its strongest. The slowing of the growth rate in the second quarter is “a really ominous sign,” said Jay Lybik, national director of multifamily analytics at CoStar. “It’s retreating quickly.”
CoStar projects that rent growth will continue to slow in the coming months, finishing the year 6.2% higher than last year. The firm is projecting a 4.9% increase for 2023.
The rental markets that are slowing fastest include many of the cities that saw some of the country’s fastest-growing rents during the pandemic, such as Phoenix, Las Vegas and Tampa, Fla. In Phoenix, asking rent grew 10.1% in the second quarter compared with a year earlier, according to CoStar, down from the 18.4% annual increase in the first quarter of this year and the 21.3% rise in the fourth quarter of 2021. In Palm Beach, Fla., top-tier rents have actually fallen below their 2021 high point of $2,704 a month.
Much of the rental market craziness was due to COVID-related factors that were beyond anybody’s control. But there’s no doubt it added to inflationary pressures.
Biden’s support for Fed rate increases is now, of course, being blamed for a possible recession.
In some ways, presidents can’t win because many of the steps they can take to tame inflation can have deleterious effects elsewhere in the economy.
Still, I’ll bet getting inflation under control — which Biden seems to be doing — will help the Democrats more than a possible recession will hurt them.