US saw steady year on year rental growth in 12 months to November 2018
Rent growth in the United States was steady in the 12 months to November 2018, up by 2.9%, up marginally from the 2.8% recorded in the same month in 2017.
The growth is highest year on year in Las Vegas with a rise of 6.7% and the analysis from real estate firm CoreLogic also shows that at the lower end of the lettings market rents increased more, up by 3.8% while at the higher end it was 2.6%.
Rising rents are being fuelled by demand exceeding supply, but it does depend on location. After Las Vegas the next highest rise was 5.3% in Orlando while Seattle was the only metro to see a fall with rents down by 0.7%.
The report points out that it was the first time since May 2010 that rent prices in Seattle stopped increasing, and it suggests that this shows a potential market stabilisation.
Metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth. Both Orlando and Phoenix experienced high year on year rent growth in November 2018, driven by employment growth of 4.8% and 4.2% respectively.
It also points out that rents in disaster affected areas like Houston have continued to increase throughout 2018. However, year on year growth in Houston stalled at 1% in November 2018, down from 2.4% the previous year. This is the lowest year on year rent increase for Houston since October 2017, when the metro saw its first increase since April 2016.
‘Rent growth has remained stable. However, long term rent increases have been lower than long term home price increases. For example, rent prices increased 17% over the past five years, compared with a 32% increase in home prices over the same period,’ said Molly Boesel, principal economist at CoreLogic.
‘Additionally, lower priced rentals and homes increase 1.5 to 2 times faster than higher priced rentals and homes. These lopsided gains between price tiers are common,’ she added.