May 9, 2023
Real estate remains local and despite the overall decrease in rents now occurring, some markets are experiencing large rent increases. And the locations are in a range of markets so there’s no single region that is experiencing this new trend.
Raleigh, N.C. has risen 16.6% year over year, followed by Cleveland at 15.3%, Charlotte at 13%, Indianapolis at 10.5%, Nashville at 9.6%, Columbus at 9.4%, Kansas City, MO., at 8.1%, Riverside Calif., at 7.2%, Denver at 7% and St. Louis at 4.2%, according to a Redfin report.
Reasons why vary but in Nashville it’s said to be due to investors, high home prices and a strong job market being the main drivers, according to local Redfin real estate salesperson Jennifer Bowers. In that city, the median asking rent this past March was $2,160, which represented the 9.6% climb from a year ago. Says Bowers, “Tons of investors bought homes in Nashville and turned them into rentals during the pandemic in order to take advantage of low mortgage rates and rising rental demand—which allowed them to jack up rents,” she says. “While investors have since pumped the brakes on purchases, they haven’t cut rents. Demand for rentals rose in part because skyrocketing housing prices pushed homeowners out of reach for many families. Elevated mortgage rates over the last year-and-a-half have also priced buyers out,” she says.
Elsewhere in the country, the downward rent march continues with the median asking price dropping 0.4% in March to the lowest level in 13 months, which translated to a dollar figure of $1,937 and represented the first annual decline since March 2020 when COVID-19 was declared a pandemic.
Specifically, the biggest median declines occurred in Austin and Chicago, which respectively dropped 11% and 9.2%, according to Redfin. Yet, one industry expert Dan Close, a Chicago Redfin salesperson, put it in a slightly different light. “Rents are falling, but it feels more like they’re just returning to normal, which is healthy to some degree.”
In his Chicago market, the median asking rent fall is attributable to the surplus of supply due to the pandemic homebuilding boom. He compared it to the rise, then fall. in egg prices, which had caused many consumers to raise their eyebrows and turn away from eggs when prices soared to $5 and $6 from the $3 norm. But those, too, are now scaling down, which means more eggs in food repertoires.
If you are a real estate investor, landlord, or property owner, it's essential to have a clear understanding of the rental market trends in your area. With the market shifting in unpredictable ways, it can be challenging to know where to focus your resources to achieve maximum results.
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