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After pushing steadily higher for more than a year, apartment rents now are rising at a slower pace, The Wall Street Journal reported.
U.S. average apartment rent gained 9.4 percent in this year’s second quarter, year on year, less than the 11-percent boost that marked each of the previous two quarters, data service CoStar said.
In a typical year, rents move up most strongly in the spring. Rents’ weakening momentum in the second quarter “is a really ominous sign” for landlords, Jay Lybik, CoStar’s analyst for multifamily housing, said to the WSJ. “It’s retreating quickly.”
The slowing pace will continue through this year, leaving rents just 6.4 percent higher than last year, and rising only 4.9 percent in 2023, CoStar projects.
Rent increases moderated most in cities that have seen some of the sharpest hikes in the last two years.
In the second quarter, asking rents in Phoenix were 10.1 percent higher, year on year, compared to 18.4 percent in the first quarter and 21.3 percent in 2021’s final three months.
In Palm Beach, rents have slipped below their 2021 peak of $2,704 per month.
Rents also are rising at lesser speeds in Las Vegas and Tampa, the WSJ noted.
Unaffordable rents may be forcing people to make other living arrangements, such as taking roommates or moving in with family members.
In June, the U.S. apartment vacancy rate grew for the first time in 14 months, edging up from 3.5 percent to 3.7.
“We believe there will be increasing resistance to rent levels, especially in coastal urban areas where rents are setting new records,” Piper Sandler analysts wrote in a research note last month.
TREND FORECAST: As the economy goes down, rent prices will not go higher. And as employment numbers increase there will be more vacancies that will push prices somewhat lower. Also a new U.S. Census Bureau and Harvard University study released last week found that more young people are living with their parents to save money.