New Rent Reductions – Nationwide Supply of Apartments Increase
In the wake of a deteriorated, but recovering, housing market, it seems there are new trends that the American populace will surely cheer for. Apartment rent across U.S. metropolises has slowly subsided as new supply has reinvigorated the industry. For the past six months into January of the new year, U.S. apartment rent has steadily declined, the first consecutive six-month drop in almost five years. This has been mainly due to supply, after a short-lived boom during the pandemic has now started fizzling out; with rising interest rates and stubborn inflation, several tenants have started to exit their rental contracts.
A common and well-followed rule for apartment occupiers has stated to never exceed 30% of your income on rent, however, it seems that the exceptions to these rules have begun to break apart. In the five years leading into 2021, 19 million out of 44 million renters in the United States spent more than 30% of their income on rent and housing, a severely high statistic that, under much harsher economic circumstances, has forced several households to search for different living options. With these units increasing apartment supply and annual complete apartment buildings at a record high, prices for rent have continued to plummet much to the delight of the American citizen. Rent prices from August to January declined upwards of 3.5%, a statistic that mirrored the falling trend in home-sale prices late last year at 3.6%. Regardless, after early 2022’s annual rent growth of almost 20%, it is gratifying to see small improvements in a sector that has been afflicted by the aftermath of the pandemic.
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I am not a financial advisor and my comments should never be taken as financial advice. Investments come with risk, so always do your research and analysis beforehand.