Rent prices have continually hit all-time highs in the first few months of this year, and some markets are seeing month-to-month price increases, and decreases, on a dramatic scale.
In 2015, the share of households that rent increased to 37% nationally, the highest share since the mid-60s. That number, which is up from 31% over the last ten years, equals approximately 43 million people that rent. The increased share of renters has been fueled by a slow recovery from the housing crash in some markets, changing demographic trends, and low wage growth. Average rent prices currently stand at a historic high of $1,181, according to Yardi Matrix’s Monthly Rent Survey for March 2016.
San Jose, California, saw the biggest rent increase for a one-bedroom apartment in the nation this month, rising 28% from $2,821 in March to $3,606 in April. Dallas, and Los Angeles followed with increases of 21% and 18% respectively, and Washington, D.C. (14%), and Colorado Springs, Colo. (13%), rounded out the top five markets for month-over-month rent growth in April, according to research done by ABODO.
“San Jose, specifically, is following a trend that we're seeing across the country,” says the ABODO Research Team. “Since the larger cities like San Francisco have experienced rapid growth over the past year, a lot of renters are moving out of those major metro areas and into smaller, more affordable cities like San Jose. This has increased demand in those smaller cities, giving landlords the opportunity to raise prices because of the smaller supply available."
Las Vegas, a market still struggling to recover from the housing bubble burst, had the largest fall in rent prices from March to April, decreasing -11% from $882 to $784. Sin City was followed by Fort Worth, Texas, at -10%, Bakersfield, Calif., at -9%, and Richmond, Va., at -8%. Rent in Portland, Ore., dropped -7% from March to April—the Oregon city saw a higher than average rent increase over the last twelve months, but has been slowing in the first quarter of the year due to unsustainable growth. Rent decreases in these metros were possibly due to shifts in demand or new supply.
The ABODO Research Team cites a number of factors as reasons for the rent increases in some of the nation’s top metros including low home values, stringent financing standards, and inconsistent single-family home recovery across markets since the housing bust. But home sales are increasing nationally with Western markets leading the charge, and rising costs of rental housing may foster a tipping point that will send some renters back to the for-sale housing market.
"One of these issues is that the U.S. rental market saw historically low levels during the mortgage finance boom and has been steadily shifting to historical norms since the mortgage bust,” the ABODO team stated. “With homeownership rates falling, it makes sense for landlords to continue to raise pricing on their rental units, especially in markets with tighter inventory.”
Take a look at ABODO's infographic below for more information on the markets where rent is increasing and decreasing the most.