Renters Benefiting From More Apartment Supply
FAU survey shows 70 markets with smaller average rental rates.
The rental crisis is easing, according to a new survey, which shows that renters are benefiting from an increase in supply.
“That’s exactly what had to happen,” Ken H. Johnson, Ph.D., an economist in FAU’s College of Business said in prepared remarks.
“The added supply appears to have come from delivery of units under construction, an increase in unit density and the conversion of many Airbnb-type units to long-term rentals.”
Florida Atlantic University and two other schools conduct this monthly survey.
Its October report showed that 70 housing markets (up from 38 in September) had smaller average rental rates.
Springfield, Mass.; Austin, Texas; Seattle and New York are among the metros where rents are falling. The U.S. average rental rate was $2,040, down 0.9 percent from September.
Florida Leads US in Rent Growth
Florida has been less affected by the slowdown, as rental rates there remained elevated in some markets.
Cape Coral-Fort Myers led the U.S. in both the largest year-over-year rental increase (17.16 percent) and the largest premium (17.37 percent).
Most Florida rents are declining month over month, but Cape Coral-Fort Myers posted a 1.76 percent increase in October.
“The significant rise in Cape Coral-Fort Myers is very disheartening, though not surprising,” Shelton Weeks, Ph.D., of Florida Gulf Coast University’s Lucas Institute for Real Estate Development & Finance, said in prepared remarks.
“The monthly index report is highlighting the ongoing cost of Hurricane Ian. There are signs of a recovery, but affordable housing should remain an issue in this market for months to come.”
A premium is the amount above the long-term leasing trend that renters must pay. Rents typically increase only 3 to 5 percent a year.
Vegas Posts Smallest Annual Increase
The FAU report showed that Las Vegas posted the nation’s smallest annual rental increase at 1.58 percent. Minneapolis had the smallest premium at 1.03 percent.
Bennie Waller, Ph.D., of The University of Alabama’s Culverhouse College of Business, said that within the past month or two, rents are slowing and returning to a more normal year-over-year trend.
“It’s clear that much of the country is starting to shake off these large increases, which have been so devastating to consumer budgets,” Waller said in prepared remarks.