Rent prices are up nationwide, and that’s a real problem for lots of folks living paycheck-to-paycheck. Rent in San Jose is up while they’re down in Austin, according to a recent article. This is interesting when you take into account the laws of demand and supply, as well as the migration patterns from/to these areas. Illinois has passed a law that prohibits landlords from screening prospective tenants’ immigration status. This is likely to lead to more rent defaults.
Rent increases are not the only factor.
Rent.com reported that rent prices rose for the fourth month running in June after they had bottomed out in February.
Since April, prices have increased by more than 3%. Prices from May to July grew more than 1,7%. Only March experienced a higher monthly growth of 2% over the past year. Since February’s lowest price, monthly changes in prices have grown by an average of 0.89%.
The prices are still below the peak of last summer.
Rent in August 2022 was $2,053, a 1.8% decrease. Rents declined by 6% in February 2023 from their previous high of $1936. The June price is a 5% rise from February and the highest price since August 2022. Prices have increased by over 15% in the last two years, and rents are now more than $275 higher.
Rents are falling in some areas:
Washington, Idaho Arizona, and Nevada were the four states that experienced the greatest rent decreases in June. Washington and Idaho saw a price drop of more than 6 percent, Arizona by less than 5 percent, and Nevada by slightly over 3 percentage points. Oregon, a Western state, also saw a decline of 3 percent.
Rent in Texas and Oklahoma, two southern states, declined by approximately 4% and 2,5% respectively. Rents declined in 14 states on a yearly basis during June.
This could be due to a variety of reasons.
Look at states where rents have increased compared to those where they’ve decreased. The article lists the top ten cities for rent increases.
- Kansas City, Missouri (16%)
- Providence-Warwick, RI-MA (+11%)
- Minneapolis-St. Paul-Bloomington, MN-WI (+10%)
- San Jose-Sunnyvale/Santa Clara (+9%)
- Charlotte-Concord-Gastonia, NC-SC (+7%)
- Nashville-Davidson-Murfreesboro-Franklin, TN (+7%)
- Hartford-East Hartford – Middletown, CT (+6%)
- San Diego-Chula Vista-Carlsbad, CA (+6%)
- Columbus, OH (+5%)
- Los Angeles-Long Beach-Anaheim, CA (+5%)
Three of these cities are located in California. San Jose, Los Angeles, and San Diego all have rent control laws. Rent controls can be sold as a way to control prices, but they don’t work in reality. A shortage of contractors to do upkeep and construction is also a problem.
In general, housing prices are on the rise. This spills over to rental markets as many rental properties (rental homes, condos, and townhomes) may be owned. As the cost of housing increases, fewer people are able to afford a down payment and have the income to buy a house.
Increased supply is the answer.
As someone who has visited a number of major cities around the world, I’ve seen how they deal with affordable housing when it comes to congested areas. Vertical filing. High-rise apartment building construction is expensive and difficult. Zoning laws imposed by NIMBY city councils (not in my backyard) are not helping either.
Land-use regulations are causing housing prices to rise, not only in single-family homes but also in multi-family buildings. Building codes, especially in urban areas, should only describe the essential safety requirements. Zoning regulations must be relaxed to allow more high-rise developments. We can make our cities safer and more affordable with a few reforms.