Rents increase sharply compared to last year, the pace continues to slow down

in Estimated risk per 29.07.2022 12:35:00

Today in the Calculated Risk Real Estate newsletter: Rents increase sharply compared to last year, the pace continues to slow 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 June 2022 (list of apartments until July 2022).

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

Zillow rose 14.8% y/y in June from 16.0% y/y in May. This is below the peak of 17.2% y/y in February.

The ApartmentList is up 12.4% year-on-year as of July, compared to 14.1% in June. This is below the peak value of 18.0% year-on-year in December last year.

Case-Schiller House Price IndicesIt is clear that rents are still rising and we should expect this to continue to be reflected in inflation figures in 2022. Owner equivalent rent (OER) rose 5.5% year-on-year in June from 5.1% year-on-year in May 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.

There is much more in the article. You can subscribe to https://calculatedrisk.substack.com/