Rents fell in August for the first time since 2021, but they remain sky-high in these major US cities

For the first time since November 2021, US median monthly rents fell short of a new record high and even fell slightly month-on-month — by $10 to $1,771, according to a report on August rental conditions from Broker.com.

But tenants, don’t breathe easy just yet.

While the pace of year-on-year rent increases appears to be slowing – last month marked the first period of single-digit annual rental growth in 13 months, as well as the first decline in median asking rents since last November – renters are still there with above-average housing costs too battle.

Median rental growth for 0-2 bedroom units in the 50 metro areas Realtor.com surveys slowed to 9.8% year over year, but rents were still rising three times faster than before the pandemic.

Rents fell slightly in August compared to July for the first time since November 2020 – by 0.1% report by real estate research firm CoStar Group.

The force of wage increases, achieved during a tight labor market, was also eroded by the worst rate of inflation in decades. At the same time, credit card balances are rising and personal savings rates are falling.

Renters, earning a typical household income, invested 26.4% of their money in housing in August, compared to the 25.7% they spent last year, the Realtor.com report said. That means they’re marching closer to the edge of a common affordability standard: spending no more than 30% of monthly income on rent.

“Our analysis underscores the very real housing affordability challenges facing many Americans today. Rents are significantly higher than in previous years and take up a significant portion of incomes, which are growing at a slower pace than inflation,” Realtor.com chief economist Danielle Hale said in a statement.

(Realtor.com is operated by News Corp NWSA,
-1.89%
subsidiary Move Inc., and MarketWatch is a unit of Dow Jones, which is also a subsidiary of News Corp. is)

A handful of cities were also far from accepting the 30 percent rule. Of the country’s 50 largest major cities, 9 had a rental share of more than 30% compared to typical household income in August, Realtor.com said. At its most extreme, renter households with a typical Miami household income could expect to invest 46.5% of their monthly income in a typical rental, with median prices averaging $2,626.

While average one-bedroom rents have skyrocketed year on year in some of the country’s most expensive cities, hitting $3,930 in New York City and $3,040 in San Francisco this month, renters in smaller cities like Fresno and Tulsa have had also big problems Increases of about 40%, according to a separate study by Zumper, a home rental website.

(Zumper’s data also shows that in New York City, which has the highest prices in the country, rents vary by borough. The median rent for a one-bedroom apartment in Brooklyn has risen to $4,506, a stunning increase up 61% YoY. while Manhattan one-bedrooms are up 33% to hit $5,283 in August.)

“That said, there have been some bright spots for renters recently,” Hale said in a statement. “Based on the general rule of thumb that you should keep housing costs under 30% of your paycheck, August renters were able to follow best practices in most major metro areas.”

“Furthermore, as rental growth continued to cool, national rents hit not the first time in nine months a new record high,” she added. “If these trends and the typical seasonal slowdown continue, renters may be in a better position to keep housing costs within a relatively manageable portion of their budgets over the coming months.”

https://www.marketwatch.com/story/rents-fell-in-august-but-heres-why-tenants-are-still-suffering-11663876706?rss=1&siteid=rss Rents fell in August for the first time since 2021, but they remain sky-high in these major US cities

Brian Lowry

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