There seems to be a dramatic changeover happening during the 3rd quarter in a few of the U.S priciest cities with respect of apartment rents that could alarm the closing stages of a six-year boom in the real estate rental market.
There was a decline of about 3% in rental value in San Francisco, 1% in New York and lower in Calif, Houston and San Jose. Nearly there was about an average rent growth of 4.1% across the U.S.
The rental market started to decline off its prime boom in decades. Since 2006, the peak housing market period, due to the aspects such as foreclosure issues and peoples’ interests to move towards urban living has made nearly 7 million new renter households, and also the ownership of abodes rate declined to 51-year lows.
Most of the apartment developers have turned their interest to downtown areas, catering their services to wealthy young professional who are ready to spend their income towards rent with a just motive of staying near to shops and restaurants. Since 2010, across the urban areas in the U.S, there has been a hike of about 22% in rent. Compared to older ones, high-end apartments are now commanding a 45% more premium according to Axiometrics.
According to MPF, still, some portions of the market are stronger where rents for median price apartments are about up of 4.9% than the previous year. According to Axiometrics, in most of the reasonable cost of living cities, there has been strongest rent growth and as well the single family home market has gained strong demand.
Due to a heavy supply of new abodes, there has been rent slowdown. Nearly more than 555,000 houses are under construction around major U.S metro areas. On the other hand, since 2010, tenants are also starting to be stringent in their purse strings due to the jump in the rents by as much as 60% in fewer markets. Meanwhile, there has been slowdown in the high-paying job market in San Francisco, New York and locations nearby Silicon Valley.
There seem to be more than 42,000 new units are expected to be built by the end of 2018 in New York according to Axiometrics. Meanwhile, there prevails a losing steam in job growth in a few of the major cities. A real-estate brokerage firm that handles single family homes and apartments on behalf of landlords, says that it just took only a week’s time on the market for the past 2 years to find a tenant, but now it takes nearly a month to find.
And hence, in most of the major areas in New York, the new tenants are offered with two months of free rent and thereby there has been tough competitions created. Due to this scenario, several large property developers who own lot of rental properties are majorly affected. Due to the tremendous supply of rental properties, there has been impact in the rental prices.
Also, some urban developers have given up their pipeline projects which could help the rental housing market to get stabilized preferably by 2018 or 2019. But, then many expert economists suggest that there are more likely chances of a recession.