Rent rises sharply compared to last year, pace slows down

on Estimated risk per 07/01/2022 12:39:00 PM

Today in the Calculated Risk Real Estate newsletter: Rent rises sharply compared to last year, pace slows down

An excerpt from the letter:

Here is a graph of how these figures have changed on an annualized basis since January 2015. All these indicators are valid until April 2022 (list of apartments until June 2022).

Please note that new rental rates (Zillow, Apartment List) declined at the beginning of the pandemic while BLS rates remained stable. New leases were then negotiated and BLS measures are gaining momentum.

Zillow rose 15.9% y/y in May compared to 16.6% y/y in April. This is below the peak of 17.2% y/y in February.

ApartmentList is up 14.1% year-on-year as of June, up from 15.4% in May. This is down from a peak of 17.8% year-on-year in December last year.

Case-Schiller House Price IndicesClearly rents are still rising and we should expect this to continue to be reflected in inflation figures in 2022. Owner equivalent rent (OER) rose 5.1% year on year in May compared to 4.8% year on year in April and is likely to rise. further in the coming months.

I suspect rent growth will slow down in the coming months as the rate of household formation is slowing downas well as more offers on the market.

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