Home price appreciation isn’t keeping up with rent increases, and that has many concerned about a possible housing crisis akin to 2008.
The average rent in the US crossed the $2,000 a month threshold in May, after an April increase of 15% for rent following March’s 17% increase. The median rent in 2016 was $1,600.
In a new report on rent costs, real estate company Redfin includes this:
"More people are opting to live alone, and rising mortgage-interest rates are forcing would-be homebuyers to keep renting,” said Redfin deputy chief economist Taylor Marr. “These are among the demand-side pressures keeping rents sky-high. While renting has become more expensive, it is now more attractive than buying for many Americans this year as mortgage payments have surpassed rents on many homes. Although we expect rent-price growth to continue to slow in the coming months, it will likely remain high, causing ongoing affordability issues for renters.”
Earlier this week, the Federal Reserve raised interest rates 75 basis points, and the impact has been immediately felt in the housing market, showing up as increased costs for rent. We are feeling other pressures. “Houston is kind of its own niche market, just as Texas is,” says Maria Dougherty with God’s Country Realty in Conroe. “We still have a great influx of people coming in and housing is still trying to keep up with that.” It’s all those people streaming into Texas from California and northern states that keep inflation from taking too much of a bite in the cost of renting. “Many people are sitting back and kind of waiting, whether they’re staying in their home or just coming down and instead of buying when they come into the area they’re renting to get a better feel.”
The largest rental increases on record nationally are being felt in Austin, where asking prices have surged 48% since 2019. Number two on the list, Nashville, is up 32%.
Zumper, a website where renters find properties available, lists Sugar Land as having the highest rates in the Houston area, with a one-bedroom unit averaged $1,250 a month. Houston and Pearland are tied for second at $1,200. The least expensive is Pearland.
photo: Getty Images