Apartment Rents Up 13% Year Over Year

Apartment rents increased nearly 13 percent nationwide over the past year–the highest rate in at least two years–but growth slowed slightly in October, reports from Redfin and RealPage said.

Redfin, Seattle, said average monthly apartment rents increased 12.5 percent over the past year to $1,858. Rent price increases outpaced mortgage payments for new homebuyers in 29 of the 50 largest U.S. metros during October.

“Fast-rising rents could contribute to inflation woes,” said Daryl Fairweather, Chief Economist with Redfin. “Employees facing higher rents are likely to demand higher compensation from their employers, which could in turn lead to even more inflation down the line. Skyrocketing rents in some of the most desirable cities suggest that there is an overall shortage of homes, and not just of homes for sale.”

Fairweather noted the ‘Build Back Better’ bill currently being considered in Washington contains $150 billion in spending earmarked for affordable housing. “[This] could at least begin to address the issue, but the bottom line is that a lot more housing needs to be built in the places that are growing the most,” she said.

Metros with the biggest increases in rent prices–more than 30 percent–included Florida, Washington, Oregon, Texas and New York, Redfin reported.

RealPage Chief Economist Greg Willett noted effective asking rents for move-in leases climbed 0.6 percent during October, the slowest pace of growth recorded since February. Rents rose more than 2 percent per month in June and July.

“Even with the pace of price growth slowing on a month-to-month basis, the annual jump in rents for calendar 2021 will be the biggest on record by a sizable margin,” Willett said. He attributed October’s dip in leasing activity to “seasonal slowing.”

RealPage also reported the share of apartment leases containing rent discounts fell to the lowest point since at least the early 1990s. “This comes as occupancy remains at all-time highs and available apartment units are scarce,” RealPage said in Apartment Rent Concession Utilization at All-Time Low.

Only 10.9 percent of all U.S. apartments offered any kind of rent concession in the third quarter, RealPage said, less than half the rate seen just two quarters ago and far below the 20 percent long-term average.