Rental Increases are Slowing


Apartment rent prices grew significantly in 1Q, but it’s starting to look like the leverage that landlords once had could be diminishing as an increased supply takes over the market and the single-family housing market replenishes itself. 

The average monthly rent in the United States is currently $1,054 – which is up half a percentage point from last quarter and up 3.4% from a year ago at this time.  Ultimately, this represents the slowest growth since the end of 2011.  The nation’s vacancy rate fell 0.2% percentage points.

In the past several years, landlords have been collecting a solid profit due to a steady supply and demand from consumers who didn’t want to buy homes.  Since late 2009, rental rates have increased by almost 10%. 

With the housing market having made a comeback over the past year, we’re now seeing a large majority of renters who have turned into homeowners.  The new unit supply continues to increase sharply as time goes on.  That being said, analysts are concerned that the multifamily apartment sector may have already reached its cap, due to the fact that there aren’t many opportunities to push rent.

Real-estate investment trusts that have apartment buildings or complexes performed worst out of all the REIT sectors in 1Q.  In general, REITs had a 7.9% return while apartment REITs decreased 0.03% in 1Q. 

Wichita, Kansas is still the nation’s least expensive market with rent averaging $520 a month; New York has the most expensive market with rent averaging $2,989 a month.  Nashville, San Diego and Seattle all saw impressive 1Q rental gains.  Overall, 79 markets saw rent decline during the first quarter.

But still, the nation is concerned about overdevelopment.  This year, the nation’s fifty-four biggest metropolitan markets are forecasted to build 150,000 new units and an additional 300,000 units up until 2015.

Call today for Today’s Interest Rates (626) 786-5512.

*Original article Rent Rises are Slowing published on

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