For the most significant question that who is ahead in the rental market whether renters or landlords, we have got a fairly clear answer a while now. Rarely, renters have gained a break since several major real estate markets start to restore from the Great Recession in 2010. But, this may have a change in the year 2017.
From 2010-2016 which is considered as recovery years have experienced rent growth for about 150 basis points ahead the long-term average. With this, renters only start to experience relief from the consistent price hikes towards the end of the previous year. In 2017, we can expect furthermore declines in few markets where rental price have risen to the peak.
Even though renting apartment is not like a zero sum game, slower growth in the rental value in 2017 is predicted to be more advantageous for renters when compared to the landlords. Nationally, the average annual rental value increase during the last 6 years was nearly $516. It is predicted to get down to an extent of about $347 during this year, reflecting approximately $168 in annual savings.
Trends by Market
San Jose, Oakland and San Francisco are those markets that lead the pack for maximum savings during 2017. Renters in San Jose stand to pay $2,647 approximately a year when compared to the last six year’s average rent.
Similarly, annual savings predicted to be $1,647 and $2,638 in Oakland and San Francisco respectively during 2017. During the last six years, both these markets have experienced substantial hike in the rent, frequently generating double-digit rent growth which was not substantial more than the long term.
The optimistic change in elasticity value during 2017, when compared to that of long-term history, denotes that renters belonging to these markets becoming more sensitive to hikes in price.
When compared to other counterparts on the opposite coast, in New York renters experience substantially only smaller savings for about $630 annually. In New York, positive elasticity value denotes that they are more than all set for the decline.
Due to the drop in the prices of oil and gas, Houston saw a huge impact in respect of job growth and continued weak employment opportunities. This could be one of the reasons that made renters in this market experience the highest sensitivity to the price.
The residents in this location may save nearly $509 in 2017. Though job market predicted to pick up during this year, it will remain to stay below compared to the metro’s capacity, maintaining rent levels lower.
Last year, performance of the Denver market has been slowed significantly due to the rental value growth returned to much sustainable levels which was mostly in double-digits during most of 2015. Thus it may yield a savings of about $502 annually for Denver renters this year.
Similar to that of several markets in the nation, the increase in the new supply and slow performing job growth will compensate the lower levels of rent growth during this year in Boston. Since the beginning of the recovery, rent growth experienced in this market has been varied, still slowed during 2016. Renters should experience an annual savings of about $441 on rent in 2017, when compared to the annual average rent hike during the past 6 years.
Even though when compared to the Bay Area, Seattle has not attained the rent growth highs, it also not experienced the similar lows during the past year. Recently in San Francisco, San Jose and Oakland, the rent growth has dipped into the adverse level, the Seattle market remained strong.