Today, in the Calculated Risk Real Estate Newsletter: Asking Rent Growth Flat Year-over-year
A brief excerpt: Tracking rents is important for understanding the dynamics of the housing market. For example, the sharp increase in rents helped me deduce that there was a surge in household formation in 2021 (See from September 2021: Household Formation Drives Housing Demand).
The surge in household formation has been confirmed (mostly due to work-from-home), and this also led to the supposition that household formation would slow sharply in 2023 (mostly confirmed) and that asking rents might decrease in 2023 on a year-over-year basis (now flat year-over-year).
Here is a graph of the year-over-year (YoY) change for these measures since January 2015. Most of these measures are through May 2023, except CoreLogic is through April and Apartment List is through June 2023.
The CoreLogic measure is up 3.7% YoY in April, down from 4.3% in March, and down from a peak of 13.9% in April 2022.
The Zillow measure is up 4.8% YoY in May, down from 5.3% YoY in April, and down from a peak of 17.0% YoY in February 2022.
The ApartmentList measure is flat at 0.0% YoY as of June, down from 1.0% YoY in May, and down from a peak of 18.2% YoY November 2021.
With slow household formation, more supply comes on the market and a rising vacancy rate, rents will be under pressure all year. Although asking rents increased in June according to ApartmentList, “rent growth is gradually declining at a time of the year when it’s normally picking up steam”.
Since rents increased sharply last year in July, asking rents will likely be down YoY in the next ApartmentList report. There is much more in the article. You can subscribe at https://calculatedrisk.substack.com/