If you’re a renter, you probably know first-hand what’s happening to rental rates.
They’ve been going up over the past year. That’s a big deal because as you also know, rent likely represents your biggest regular expense.
Rents for primary residences soared 0.6% in February over January, the biggest gain since 1987, the government reported on Thursday. Rental data are reported with a lag, so that number will almost certainly rise going forward.
No U.S. city is more famous for its high rents than New York (San Francisco might compete for that dubious distinction). Median Manhattan rent jumped by a record 28% in February from a year earlier, hitting an at least 10-year high of $3,630, according to the Elliman Report, prepared by Miller Samuel Real Estate Appraisers & Consultants.
“This month, there was a noticeable uptick in all rental price trends as listing inventory and the vacancy rate continued to collapse,” the report said.
No Inventory. Plenty of Bidding Wars.Listing inventory plunged 81.1% to 4,541, the biggest ever year-over-year fall. And the vacancy rate dropped to 1.32%, the lowest for a February since 2008.
“We’re seeing that rents have returned and basically surpassed where they were prepandemic,” Nancy Wu, an economist with StreetEasy, told The New York Times, referring to rents across New York.
The portion of Manhattan rentals seeing bidding wars — multiple candidates for the same unit — soared to 17.7% from 0.9% a year earlier. And the portion of rentals with landlord concessions dropped by more than 50%, to the lowest level since September 2016.
Nationally, more rent increases loom, especially with inflation soaring across the economy. Consumer prices surged 7.9% in the 12 months through February, a 40-year high.
“There’s still further strength to be seen” in rents, Sarah House, senior economist at Wells Fargo, told Bloomberg. “We don’t expect that to peak until maybe the third quarter of this year.”
‘List of Inexpensive Places Is Shrinking’The average asking U.S. rent totaled $1,891 in January, jumping 15.2% year-on-year, the largest increase since at least February 2020, according to real estate brokerage Redfin.
“Moving right now is expensive, whether you’re renting or buying,” Redfin chief economist Daryl Fairweather said in a statement. “One of the only ways to avoid high housing costs is to move somewhere cheaper. But the list of places that are truly inexpensive is shrinking.”
Further, “Rising mortgage rates are squeezing more Americans out of the for-sale market, which will likely put increasing pressure on rents in the coming months,” he said.
The top year-on-year rent increases for January came in: Portland, Ore., up 39%, Austin, up 35%, Newark, N.J., up 33%, Nassau County on New York state’s Long Island, up 33%; New York City, up 33%; New Brunswick, N.J., up 33%; and Miami, Tampa, Fort Lauderdale, and West Palm Beach Fla., each up 31%, according to Redfin.