By Alexandre Tanzi
The pace of rent increases is heating up in the U.S.
Rent data for the past two months show no sign yet of the usual seasonal dip at this time of year, following peaks early in the summer, when many lease renewals come due.
A Zillow Group Inc. index based on the mean of listed rents rose 11.5% in August from a year earlier, with some cities in Florida, Georgia and Washington state seeing increases of more than 25%.
“To have double digit rent growth over the course of a year and a half is a shocking level of growth, especially considering the vast majority of it has come in the last 9 months,” according to the Zumper National Rent report.
Since the start of the pandemic, the median rent for a two-bedroom apartment has soared 13.1% to $1,663, Zumper data show.
For the New York market, landlords are raising rent prices as much as 70% now that people are flooding back into the city as offices and entertainment venues open up. In July, the median asking rent surged to $3,000, compared with the pandemic low of $2,750 in January 2021, data from StreetEasy showed.
There are some signs that price growth may be easing, especially in cities that saw the largest gains. In Boise, Idaho, where prices have risen the most since the start of the pandemic, rents have dipped slightly this month compared with August in the Apartment List database.
Another indicator that rents may start to stabilize is the Apartment List vacancy index, which ticked up in August for the first time since last April. Still, rents continued to rise month over month in September — at a time of the year when they would normally decline, the company said in its monthly report.
Yardi, another company that tracks rents, found that national year-over-year rent growth was 10.3% in August, the first ever double-digit increase in its index. However, Yardi said, annual increases may be misleading in the many metropolitan areas that were at a low point a year ago, when people fled cities as Covid-19 spread.
In the longer run, even if rent growth cools in the next months, inflation is here to stay. The Dallas Federal Reserve predicts that the official rent index from the Bureau of Labor Statistics will increase to 6.9% by year-end 2023, which would be the highest in more than 30 years.
It’s not just rentals. Prices for single-family homes rose almost 20% in July from the prior year, the largest increase in more than 30 years. That’s pricing out many first-time home buyers, with that group accounting for only 29% of existing home sales in August, the lowest since January 2019.
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