National Rents Stall For 4th Month In A Row As Multi-Family Supply Glut Takes Its Toll

Tyler Durden's picture

After a steady march higher in the wake of the 'great recession' nearly a decade ago, a note today from Rent Cafe reveals that average rents in the United States have now stalled for 4 months in row with September's national average coming in at $1,354 per month, which is virtually flat from the $1,350 average reached in the summer.

National rents have barely moved through the entire peak rental season and into September, marking the longest period of stagnation in recent history — 4 consecutive months. Coming in at $1,354 for the month of September, the average rent is only 2.2 percent higher than this time last year. This is the slowest annual growth rate we’ve seen in more than six years — having reached a high point of 5.5%-5.6% peak growth around two years ago — a pretty good indicator that the rental market has entered calmer waters.

 

Still, that doesn’t mean rents have flat-lined everywhere. Though nationally and in the most expensive cities for renters prices have finally come to a full stop, there are still some holdouts—and it seems renters in smaller and mid-sized cities are not yet getting a break, on the contrary.

 

As we pointed out over the summer, just like almost any bubble, stagnating rents are undoubtedly the symptom of a massive, multi-year supply bubble in multi-family housing units sparked by, among other things, cheap borrowing costs for commercial builders.  Per the chart below from Goldman Sachs, multi-family units under construction is now at record highs and have eclipsed the previous bubble peak by nearly 40%.

Goldman

 

But, while rents are certainly slowing – and construction is indeed playing its part – the impact isn’t spread evenly across all markets as Rent Cafe notes that the construction boom in Texas has earned the state 6 out of 10 of the worst performing rental markets in the country. 

The anticipated rent drops from Hurricane Harvey have not been realized in the city of Houston, but are seen in other Texas communities, with the biggest changes being outside of Harvey’s reach, as a result of the major apartment construction taking place throughout the state. Lubbock, located on the west side of the state, came in at No. 1 for biggest year-over-year rent decreases in the nation, with rents dropping 3.4 percent since 2016.

 

Rents for apartments in Round Rock, a suburb outside Austin—another city barely touched by Harvey, dipped to $1,092—3.4 percent below last year’s numbers. Round Rock took the No. 2 spot for biggest rent decreases of the year.

 

Texas claimed the third spot, too, with McAllen’s 2.6 percent drop in rents since last year, and three other Texas towns—College Station, Waco and Plano—also made the top 10, with decreases of 2.4 percent, 2 percent, and 1.1 percent, respectively. The rest of the list was spread throughout the nation, with California’s Simi Valley taking No. 4 (down 2.6 percent), New Orleans at No. 5 (down 2.4 percent), Manhattan, NYC at No. 8 (down 1.9 percent), and Tulsa, Oklahoma at No. 9 (down 1.5 percent.)

Meanwhile, areas with stronger job markets and/or better overall affordability are still seeing demand growth which, combined with a lack of capital investment, is driving rents considerably higher.

Though smaller and mid-sized towns used to be a haven for renters looking to avoid the sky-high prices of large urban areas, it seems those days are in the past. September’s list of fastest-growing rents is dominated by small and medium-sized towns—many boasting double-digit growth since this time last year.

 

The Lone Star State’s Odessa and Midland—both hubs of oil and gas activity—came in at the top two spots, with jumps of 24.7 percent and 20.7 percent, respectively. Odessa rents now clock in at $1,060 per month, while Midland’s reach even higher, coming in at $1,225.

 

The rest of the nation’s fastest-growing rents can be found largely on the West Coast, with California, Washington, Nevada and Colorado taking up the remaining bulk of the list. The only Northeastern cities to see big year-over-year rent growth were Buffalo, New York, with an 11.2 percent jump over 2016, and Elizabeth, New Jersey, which saw rents climb 8.5 percent to $1,187.

 

Finally, here are the top 10 most and least expensive rental markets in the U.S. at the end of September 2017.  To our complete lack of surprise, New York and California continue to dominate the expensive list while Southern and Midwestern markets continue to provide the best value...perhaps this is why all those domestic migration studies show a mass exodus from the cities on the left to the cities on the right?  Just a hunch...

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ebworthen's picture

Praise the Lord, because the rent IS too damn high!

ayanni's picture

$1350?  No way $1350 is sustainable.

Endgame Napoleon's picture

Monthly Take-Home Pay — $10-per-hour job

$1,400

Rent — $1,350

That leaves $50 to cover the following bills:

Groceries

Gasoline

State-required auto insurance

Clothing

Heating

A car note

A phone

Obamacare HaHaHaHa

But since I don’t have kids, I do not need the money, say the “working moms” who get free rent, free groceries, energy assistance, monthly cash assistance and child tax credits of between $3,337 and $6,269, along with the divorced moms with child support that covers rent and the married moms with spousal income.

They “need” the money.

People who have only one earned-only income stream do not need money because we are not “working families,” and we can stretch the remaining $50 over all of our major bills after the too-*****-high rent is paid. If the Rent Too High guy had a less welfare-centric, less mom-centric and less socialistic platform, maybe, I could write his name in.

Hogbee's picture

It's back to mom's basement then!

FORD_FIESTA's picture

Get a roommate, and stop the whine.

ayanni's picture

dup by a newb (poster)

Bernie Madolf's picture

If interest, depreciation , and amortization of financing expenses was not deductible,

Rents, asset prices, and leverage would be lower

Kidbuck's picture

If wall street wasn't sucking up so many Section 8 checks for their apartments rents would come down. It's good to own the federal government.

Endgame Napoleon's picture

If so many welfare-fueled immigrants weren’t competing for apartment units, rent would be lower.

The government-funded housing entrepreneurs have a guaranteed, subsidized market.

It is all for baby and for moms working the welfare-required 20 hours per week.

When your rent and groceries are paid by taxpayers, it frees up your $6,269 child tax credit for beach trips with boyfriends.

It is annoying that snowflakes in mom’s basement are constantly mocked, but this stuff is 100% acceptable.

I will never forget working with a pregnant momma whose rent and groceries were paid by government, even though her first child was impaired badly due to substances consumed during her extreme youth.

She had no degree and no legally required licenses, but she was making only $1 per hour less than me, with my four licenses, bachelor’s degree and years of experience. I was paid about $20k per year.

She was anticipating her child-tax-credit reproduction reward, telling me all about her plans for spending it, which did not include many baby-related items, while dissing her childless, non-welfare-eligible sibling for living with her mother.

She is not the only arrogant momma I have encountered, bragging about her “independent,” welfare-buttressed household, while putting down those who do not qualify for pay-per-birth cash from Uncle Sam and the US Treasury Department. Some of them were ruder than her.

It is interesting how they regard themselves as independent breadwinners, even though their wages would not cover 2 of their major bills in many cases. It is part of the fake feminist delusion.

Sorry_about_Dresden's picture

Yes, yes, yes. The Feral Reserve is in the RE market, gobbling up $1.25 trillion in MBS since 2009, creating artificial demand. Many facets driving high rents.

ReturnOfDaMac's picture

There's a reason for that dickheads, you actually have to LIVE there.  Who the fuck wants to live in Amarillo, Wichita, Brownsville or ANYWHERE in Ohio or Missouri?  Fuck it, I'd rather be broke and live in a real state ...

spdrdr's picture

Ah, a Detroit inhabitant who can actually write correctly in the English language.

ReturnOfDaMac's picture

Thank you, but I prefer to live in a state where the government actually works to keep the water drinkable.  No thanks, Keep gorging on Koch cock, I'll drink clean water.

401K of Dooom's picture

Ok, you can go live in one of the overpriced coastal states.  After you pay your rent, you can send your unnecessary, extra income to me and I will put it to good use.  Btw, what will you do for work?  all the local jobs are taken by the connected and tech jobs are for the EEO categories and immigrants ( both illegal and legal ). 

ReturnOfDaMac's picture

I do now, but I prefer to own.  Renting is not my style.

HRH Feant2's picture

I can rent out my house, tomorrow, for $1500. PITI is $1000.

Sorry_about_Dresden's picture

$500 won't pay rent in another place. Going to live in truck?

WakeUpPeeeeeople's picture

How about leveraging up into another house?

Sorry_about_Dresden's picture

Can't really say if demographics justify the last run up in supply, you might get caught holding bag. Why not just rent a room to someone w/ similar temperament and stack?

USofAzzDownWeGo's picture

San Diego rent is super super high but you know what I say to that? If it wasn't so damn high then the city would be filled with a bunch of fucking niggers, making it america's worst city. 

ReturnOfDaMac's picture

Ya know, there's a navy base not far from you.  Some of those "niggers" in the navy, the ones with the guts to defend your cowardly, sorry, snowflake, ass may take offense ...  Not to speak for them, but they may not be ZH readers.

ThuleNord's picture

We don't virtue signal here. Join reality.

ReturnOfDaMac's picture

I do newbie, and I just did, go to bed before mommie beats your ass.

Endgame Napoleon's picture

You did not virtue signal. You just spoke the truth.

Wrenching Away's picture

He didn't say filled with responsible black people, he said filled with niggers. There is a difference, get used to it.

freedom1798's picture

Niggers know the difference between a nigger and a law-abiding black person.  That's why niggers use the word nigger so much.

flybye's picture

Here near Seattle a small 1 bedroom 1.200 that 20 miles So of Seattle.

Sorry_about_Dresden's picture

I lived next door to Black Country folk for 15 years in intercity; best neighbors ever.

The Real Tony's picture

Up in Canada all the renters get kicked out and new renters come in and get their rent price doubled and tripled thanks to what the Chinese did to real estate prices. Rent control only affects the renter who's in place thus all the renters in place get the boot so new renters can rent at double and triple the previous rents. I hope the Chinese don't destroy all of America and it ends up like Canada.

Fartsnifferbuffet's picture

haa  haa last week the fake john padoock shootins some how it dissapeared from news now on to next distraction harvey weinstein fukin kikes lol  don lemon on cnn wishing harvey was stiking his cock in dons ass don lemon you are a faggot nigger

freedom1798's picture

I hope the landlords are shitting in their pants, especially the ones that just built those three and four story  apartment buildings with units they are trying to rent for $3000 to $4000.   Good luck, motherfuckers, you will be lucky to get $2000.

WilliamShatner's picture

Not just rents, but home prices as well.

I'm in Silly Con Valley and there's a place near me in a decent neighbor hood on a decent street up for sale and they want 1.4 million.  It's 1800 sq. ft. on a postage stamp sized lot.

There's also a place for rent, 2 bedroom apartment that has not found a bidder for 2 months now.  That's nuts, most of time a place like that would rent with a week or two.

Something is up, and it's not the rents... or home prices (those couldn't possibly go higher).

The Real Tony's picture

Up in Canada all the renters get kicked out and new renters come in and get their rent price doubled and tripled thanks to what the Chinese did to real estate prices. Rent control only affects the renter who's in place thus all the renters in place get the boot so new renters can rent at double and triple the previous rents. I hope the Chinese don't destroy all of America and it ends up like Canada.

Let it Go's picture

We as a society create problems when we try to deny that many people go through life making their own problems and then allow the government to sidestep the issue by pawning the problem off on the private sector. An eviction on someone's record usually means they become ineligible for government housing programs. By making them "ineligible" for certain programs the government shrewdly and cleverly sidesteps having to deal with these people.

The brutal truth is that government housing cherry-picks the best of the low-income renters providing them with very low rents and nice apartments while dumping the rest on the private sector. This drives up rental prices on everyone else. More on this subject and other issues concerning housing in the article below.

 http://brucewilds.blogspot.com/2017/04/housing-policy-heaps-misery-on-private.html

Bazinga's picture

Excellent read! Thanks for sharing the link.

venturen's picture

no inflation there....with a 25% increase in your rent....just stop eating and sell your car...you will be fine