Will rents finally cool down?
There may be some relief for renters, but a return to pre-pandemic prices is unlikely, analysts said.
After record levels of demand for rental housing in 2021, leasing has slowed significantly this year, and price growth is also starting to slow, according to Jay Parsons, chief economist at RealPage, a rental housing software company.
Demand for market-rate rentals was negative in the third quarter, meaning more people were moving out of apartments than into them — the first time this has happened in the typically busy summer months in 30 years, Mr. Parsons said.
The slowdown led to the first month-on-month decline in prices since December 2020 – down 0.2 percent in September. Still, rents in the national market — $1,797 a month — rose 9 percent from the same month a year ago, in part because inventory remains low.
RealPage predicts that rents in the national market will increase by 3.3 percent next year, which is more in line with typical rent growth.
That’s cold comfort for renters in high-cost markets like New York City, where rents are rising outpaced wage growth by 23 percent in August, after adjusting for inflation, according to Kenny Lee, an economist at StreetEasy, a listing website. Aside from the big disruption to real estate at the start of the pandemic, this represents the largest gap since the 2008 financial crisis.
Median rent in September, $3,982, rose nearly 24 percent from a year earlier, though it was down 2 percent from the previous month, according to a report from real estate broker Douglas Elliman. Landlords could have more leverage in the typically slower winter months, said Jon Leckie, a researcher at Rent, a listings portal.
“If you have a couple of months to work and you don’t need to sign now, I would just hold off,” he said.