One of my favorite statistics has finally been released for Q3: median asking rent. This is a survey figure from the Census Bureau, and unlike the figures they use for inflation this one is (a) timely and (b) accurate since it includes only asking prices for new rentals. So it gives us a genuinely good view of how much rents are increasing. Without further ado:
The rental market is clearly cooling down. In Q3 asking prices were up from $1314 to $1334, an increase of 6.2% on an annualized basis. Meanwhile, average wages were up 5.6%. That's practically identical.
In absolute dollars, monthly income was up $62 while rent was up $20.
Both of these are nominal figures, not adjusted for inflation. Since I'm comparing two numbers, there's no need. However, if you want to see asking rent adjusted for inflation, here it is:
Adjusted for inflation, asking rent is 2.4% higher than it was a year ago and 3.1% lower than its peak last year. By every measure, it looks like the rental market has come back to earth. And with housing prices set to fall, I wouldn't be surprised if rent flattens out or even starts declining by the end of the year.
The home I was forced to leave this year because I couldn't afford the $2,350/mo. rent is now rented for $3,200/mo. I could not avail myself of national average rental prices, and I suspect that is the case for most folks.
Yeah, it's a little hard to take rents from LA or NYC and average them with rents in East Bumfuck, MS and then say that's some kind of benchmark. "Median rent in cities with population over 250,000" or something might give us a better idea of what most people are dealing with.
First, all the people paying 2021 rates are still paying 2021 rates. Rent is not like groceries. Second, as of right now housing sales are way down because of interest rates which means people aren't leaving the rental market which puts more pressure on rent. At the end of the day rent is just another area where big data has been used to screw people. The big management companies figured out that there is almost no increase that people won't pay because being homeless sucks. Any increase in wages in the future will go to rent.
It's just another Big Squeeze.
"And with housing prices set to fall, I wouldn't be surprised if rent flattens out or even starts declining by the end of the year."
I would be surprised. Even if housing prices start to fall (which they haven't done yet, but we'll see), mortgage payments will stay quite high with the big increase in rates we've seen. Those rate increases are still working themselves through the real estate financing process, and the levels of rents that make economic sense to landlords will continue to go up as that impact flows through the system.
And then later when rates start to fall, the higher rents will continue to inflate the lower priced portions of the housing market, since rent payment vs. mortgage payment are essentially replacement goods with inelastic demand.
An increase in rent nearly 11% higher than an increase in wages is practically identical and almost normal?
You forgot to adjust for inflation! Once you do that, it makes it seem like housing prices aren't so bad! It definitely can't be that the generational cohorts who have held the lion's share of the political power for the last 60 years are at all to blame for the rapacious nature of the real estate market in this country, where urban planners are totally not actually just wealth/retirement fund managers!
/s
I'm sorry, but if we're adjusting the rent price for inflation and it still has such a high slope, that's the exact opposite of "the rental market has cooled down to almost normal."
If you're adjusting for inflation, the rent graph should be almost fucking flat.
A few years ago, my rent went from gas and water included to surcharges on top of rent.
Great happiness this year when I got to take off my evil landlord costume and return to the Grouchy old Phart yelling at clouds.