Rents Reverse Course In February, Climbing For The First Time In 5 Months
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- 07 Mar 2023
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Asking rents climbed by $6, or 0.3%, from January to February. That is the first monthly increase in rents in five months, since they last rose in September 2022, according to a recent survey. The 0.3% increase is only somewhat smaller than the typical February increase of 0.4%, averaged over data from 2016 to 2020, suggesting that the rental market remains somewhat cooler than normal.
Typical asking rents at the national level now stand at $1,976, which is 6.3% higher than one year ago, but 0.5% below the peak of $1,987 observed in September 2022. That annual growth rate is now down more than 10 percentage points from the peak growth rate observed one year ago this month: 17.0%, the record-high pace reached in February 2022.
Monthly changes: Winter comes to Florida
The steepest monthly declines in rent were observed this February in Cleveland (-1.0%), Jacksonville (-0.4%), Salt Lake City (-0.4%), Richmond (-0.3%), and Miami (-0.3%). That bucks the recent trend of mostly Western cities, plus New Orleans, having the largest rent drops earlier this winter. The substantial declines observed in two of Florida’s major metropolitan areas suggests some cooling may finally be arriving after years of very rapid rent growth.
Rents rose the most on a monthly basis in Hartford (1.3%), Sacramento (0.9%), Chicago (0.8%), New Orleans (0.6%) and Raleigh (0.6%). Many of these markets represent more affordable alternatives to competing cities, which may explain their recently climbing rents.
Western markets: Stepping off the roller coaster
Rents are very close to where they were last February in several inland West markets. On a year-over-year basis, rents are down 1.0% in Las Vegas, and only up modestly in Phoenix (1.0%), New Orleans (1.8%), Sacramento (2.5%), and Baltimore (2.9%). Annual rent growth didn’t fall much further in these markets from its pace in January.
The Western markets may be going through a lull after breakneck rent growth in 2021, when they saw a great deal of migration from expensive West Coast markets, followed by some mean reversion in rent growth in 2022. The cumulative effect, though, is that rents still stand much higher than pre-pandemic: 3-year growth in Phoenix, for instance, is still a staggering 37%. Read More…
