Apartment dwellers feeling pressure from increasing rents aren't alone. According to new data compiled by Reis Inc., the average rent across America jumped 4.6 percent last year. As reported in a Wall Street Journal article, it's the largest such increase since the recession, while a similar study by Dallas-based Axiometrics Inc. found that rent nationwide in the fourth quarter rose 4.7 percent over the same period last year. The end result is one of the most competitive and expensive apartment markets in years, with an average price of $1,180, which raises important questions about affordability, especially with middle-tier options lacking in many markets.
The record bump in prices stems from the same confluence of factors that has pushed up rental prices for years: a low rate of homeownership (63.7 percent), a dearth of apartments with mid-range prices, and more difficult, post-recession lending standards for homebuyers. The article notes that after years of steadily rising rents, we may be near a peak. Prices in urban markets may have crested, with less room to move, especially on the high end, while new construction meant to take advantage of low vacancy rates and high prices will soon hit the market (Chicago, for example, will see a significant number of new units enter the downtown market over the next few years). The article also points out a trickle-down effect of rising rents, especially in markets historically considered secondary. The west coast provided a prime example. While astronomical rents in San Francisco and San Jose have started to taper off, demand for units in red-hot Portland, in part fueled by professionals relocating from the Bay Area, has pushed the city's rents up 12 percent in the fourth quarter, according to Axiometrics data.
· Los Angeles Rent Increases Set to Double Inflation For 2015 [Curbed LA]
· Mapping Rent Prices by Neighborhood All Over San Francisco [Curbed San Francisco]