Summer 2019 Rent Report: Where Pricing Is Heating Up, Fizzling Out
One-bedroom rents are still steadily rising while two-bedrooms are taking a breather, new research shows.
Industry experts at ADOBO.com predicted the one-bedroom rise, but the two-bedroom picture is not surprising either.
Let’s delve deeper into stats from brand new ABODO data.
We saw one-bedroom units change in price from a January median of $1,035 to $1,074 in May—an annual increase of almost 4 percent. From April to May, one-bedroom apartment rents gained 1.06 percent
Drilling down into the details, Columbia, S.C., reported a big 10 percent median rent increase from $653 to a still modest $718. Meanwhile, two towns in California—Bakersfield and Fresno—increased between 8.1 and 8.4 percent, with Fresno costlier at $1,144. And Springfield, Mo., was the cheapest place to live of all of the cities on our top 10 gainer list.
The increases we saw in May were more profound than those we had seen in previous months, and our upward trend continues in apartments of all sizes in big cities like Chicago and New York City.
Unlike some previous months, where we saw big gainer versus loser percentage differences, May’s one-bedroom decliners reported dip similar to the gainers. Las Vegas lost the most, falling from $1,493 to $1,353, a 9.4 percent drop.
Columbus, Ohio, was not far behind, losing a startling 9.3 percent, and high-flyer Berkeley, Calif., fell 7.5 percent. (Berkeley’s median rent was still high at $2,776, however.)
Two other California municipalities followed with Los Angeles and Long Beach both losing almost 6.5 percent.
El Paso was by far the cheapest place to rent on the top 10 losers list.
We look for 2019 summer one-bedroom rents to continue their steady upward movement. With record low unemployment, a healthy stock market, and great job numbers, the recession-induced trend where people doubled-up to save money is long gone. As such, for the time being, demand will steadily increase.
Two-bedroom unit median national rents fell from $1,239 in April to $1,325 in May but still showed a healthy yearly gain of over 4 percent.
Two-bedroom winners showed similar volatility in May as St. Paul, Minn., rose almost 9 percent. It now costs a reasonable $1,459 to get a two-bedroom unit there.
Red hot Glendale, Ariz., was up 8.4 percent to a nicely affordable $986, and frozen Buffalo, N.Y., gained over 7 percent. Fresno, Calif., experienced the same.
The remaining top 10 gainers were tightly bunched with increases from 4.5 percent to 4.9 percent.
Winston-Salem, N.C., was the most affordable top-10 increaser at $768, with a gain of over 4.4 percent.
Laid back Berkeley, Calif., also appeared on May’s top 10 one-bedroom losers, strongly leading the two-bedroom decliners with a huge 9.7 percent decrease. Berkley’s median rent of $3,838 is still very scary, though.
Wichita, Kan., reported the cheapest two-bedroom rent by far, as it fell 5 percent to $782.
While we saw some softening in the two-bedroom market, we think it was a monthly anomaly, and we look for two-bedroom rents to steadily continue their upward trend.
Related: How to Find the Best Rental Markets
The Big Picture
The economy is still chugging along. Whatever occurred in December when the stock market took a hit seems to be a distant memory. Beyond Meat IPO exceeded everyone’s expectations—it increased almost 138 percent on day one. National unemployment is now down to the 3 percent range, and upward of 200,000 jobs are being created monthly.
Oil prices were a concern as they had steadily increased from a low of $46 to almost $70. Now, more sanity has been restored to the oil market, and prices have eased. Lower oil prices mean lower gas prices, and lower gas prices mean more money in the pockets of consumers. This adds up to more apartment rental demand.
On the housing front, some cities like Austin are in a red-hot seller’s market, where multiple offers on listing day one are commonplace. Some million-dollar homes are selling for $100,000 or more over the asking price, and this is causing that market to become rapidly unaffordable. With a nationwide shortage of home listings, this puts even more pressure on apartment rentals.
Of course, one mitigating factor is new apartment construction. If the demand is there, developers will build more units, especially if interest rates are stable and affordable, and the Fed seems to have pledged to keep rates stable. More construction means greater supply, but there is an obvious lag between proposed and finished units.
Therefore, for all of the above reasons, we look for the summer of 2019 to bring us steady but rising rental trends.
What are rents doing where you live or invest? What do you predict will happen in the coming months?
Let’s talk in the comment section.