Rents are increasing, just at a slower pace. While rents from June 2014 to 2015 increased at a pace of 3.6 percent nationally, the growth slowed down in each of the subsequent years, according to a study by Apartment List, which analyzed rent growth rates from 2015 to 2018 to see which cities had seen the biggest changes in rents.
By 2018, the study found, national year-over-year rent stood at 1.5 percent—less than half the rate from 2015. Partially attributing this slowdown in rent growth to an increasing supply of new rental inventory in many markets, the study said that while new single-family home construction continued to lag, “spending on new multi-family housing, most of which are rental properties, is close to its pre-recession peak.”
Despite a lack of for-sale inventory homeownership rate has begun to increase for the first time in a decade, leading to a decline in the number of renter households, the study indicated. Breaking up the data at a city-level, the study found that while new inventory had slowed down the growth of rents in Seattle, Hurricane Harvey had led to a sharp increase of rents in Houston—two cities, that Apartment List found had the largest change in rent growth between 2015 and 2018.
In 2015, Seattle had registered a 5.9 percent growth in rents, which grew to 6.7 percent in 2016. In 2017, the Emerald City led the top 25 list of cities in terms of rent growths. But in 2018, Apartment List found that rents in Seattle had dropped 0.9 percent taking it to the bottom of the list, just above Baltimore, Pittsburgh, and Portland.
Houston, on the other hand, had registered a middle-of-the-road growth of 4.3 percent in 2015, which had dipped further to a growth of 0.8 percent in 2016. In June 2017 Houston was at the bottom of the top 25 list registering a 2.8 percent fall in rent growth. In 2018 though, the city was ranked second among the top 25 with a growth of 3.4 percent, with Tampa, Florida leading the chart with a 4.6 percent growth in rents.
According to the study, Houston was a unique example. “Before Harvey, Houston had one of the nation’s highest vacancy rates, but now suffers from a shortage of available rental units,” the study said. “Although many landlords froze rents in the immediate aftermath of Harvey, our data show a sharp spike in rents in Houston through the winter months, a time when rent prices normally fall. More recently prices seem to have stabilized.”
To see the complete list of Apartment List’s city-based rent change rankings, click here.