Apartment Rents Fall By 3.5%
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Here's your money briefing for Thursday, March 2nd. I'm J.R. Whalen for The Wall Street Journal. Monthly rents skyrocketed by as much as 25 percent as pandemic restrictions were lifted. But there may be some relief in sight for renters.
These are new construction buildings, and that creates more competition among landlords for renters. And on the demand side, you also have people who are getting really pinched by these higher prices and making decisions to either move home or move in with family.
So what does this mean for the rental market? Will Parker covers the housing market for The Wall Street Journal, and he'll join us after the break.
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It's not just single-family homes that saw an explosion in prices as the country emerged from the pandemic. New leases on apartments also increased. But now we're seeing a softening of the rental market. Wall Street Journal housing reporter Will Parker joins us with details. Hey, Will, thanks very much for being with us.
Thanks for having me.
So, Will, we saw a steep run-up in rents in the aftermath of the pandemic. How much have they come down?
Rents have come down about 3.5% since the summer, at least according to one measurement. And that's a reprieve for renters, but it's important to keep in mind just how much rents rose directly before that. You had rents rising something like 25% in less than two years before we started to see a little bit of a cooling more recently.
All right, so they've come down a bit, but aren't rises and falls in rents normal?
They are, and it is also somewhat seasonal. But there's a lot more going on here right now than just seasonal change. There's two factors, really. On the supply side, there's a lot of new apartments coming on the market. These are new construction buildings, and that creates more competition among landlords for renters. And on the demand side, you also have... People who are getting really pinched by these higher prices and making decisions to either move home or move in with family. And that also leads to more empty apartments and may prompt some landlords to bring down their asking rents.
Yeah. What do these declines in rents tell us about the personal finances of tenants?
I think it's unquestionable that after a 25% increase in rents in which there was not a commensurate increase in wages, that's going to have a significant effect on people's financial decision. And I think it comes from a couple of sides. On the one hand, a lot of young people may be putting off decisions to rent their first apartment, lengthening their stay with friends and family. And then there may be also some renters and some survey participants data suggests this is happening, who are making the decision to not renew leases, to move in with more people or with family because prices have simply become higher than what their incomes can support.
You know, young people putting off renting an apartment sounds a bit like what we're seeing among home sales.
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