Science

“Dangerous” fare hikes could be easing across America

US renters have been particularly battered by inflation, with one economist calling the September jump in rent costs “alarming”. But some good news may be on the horizon, with Realtor.com finding that rents are starting to drop in some big cities.

Inflation remains very high this year, government data this week shows prices are on the rise 8.2% compared to a year ago, In September, rents rose 0.8% from August alone – the biggest monthly increase since June 1990. At that pace, renters will pay their landlords about 10% more in 2022 than last year, Pantheon chief economist Ian Shepherdson said in a research note in which he called the rent increase “alarming.”

“Such growth cannot possibly be sustained in an economy where wage growth is at half the pace, and likely to slow down,” he said.

Despite that trend, there are signs that renters may be in for some relief. According to Realtor.com, the median rent in the 50 largest U.S. cities dropped to $1,759 in September, though less than 1%. Realtor.com said Sunbelt cities such as Riverside and Sacramento in California, as well as Las Vegas and Tampa, Florida, are seeing a sharp drop in prices.

Jay Liebick, national director of multifamily analytics at Costar Group, which owns Apartments.com, said other cities where rents were hiked last year are likely to come back in the coming months as well.

“It’s the beginning of the market trying to get back into equilibrium,” he told CBS MoneyWatch.

why the rent is freezing

Prices are falling partly because demand for apartments is falling, with the number of units available increasing.

really. Both Zillow and ApartmentList have reported declining rents, marking a disconnect between what the Labor Department shows and what real estate trackers report in real time.

This difference is due to a significant lag in how the government collects rent data: It tracks all rent payments — not just new leases — and most of them don’t change from month to month. That means the rent drops reported today in CPI data could take at least a year, Liebick said.

Shepherdson predicted that because of that lag, “a few more months — about three — month-over-month CPI rents will increase, followed by a clear slowdown.”


Rent prices drop in some US cities after hitting record highs

04:27

Fares to drop in big cities in 2020 coronavirus pandemic As many people fled to smaller metro areas. But once pandemic restrictions were lifted, many Americans returned to larger cities, fueling prices and demand for housing, especially in Florida and New York. At one time last year, some cities saw rent increase up to 25%

Month-on-month rents have been declining in some parts of the country, but prices remain exorbitant in many cities. Unit prices are still rising rapidly in places like Kansas City, Kansas (up 11% in September from a year ago); Fayetteville, North Carolina (11%); and Columbia, South Carolina (9.7%), according to ApartmentList data.

-The Associated Press contributed to this report.

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