Renting has always been an alternative to buying a home, and rising home costs could be driving more potential buyers into the rental market. But what happens when rental costs increase? Might it entice more people to enter the housing market?
According to the July 2017 Apartment Market Report, rents are increasing—albeit, at a slow pace, nationally. Year-over-year, rent increased 2.6 percent, with an average rent for the nation at $1,350 per month, with 84 percent of the United States’ 250 largest cities recording increases in rental prices. Only 10 cities experienced decreases in rent, while 30 cities were unchanged.
The state of Texas popped up quite a few times in the charts, recording both the largest decrease as well as the top two greatest increases. Rent in Lubbock dropped 3.1 percent year-over-year, while College Station saw a decrease in rent of 2.2 percent, and Midland and Odessa saw the largest growth, respectively.
New construction of rental apartments is also on the rise and hitting record new highs with an estimated 347,000 new units coming into the market place. That’s a 21 percent increase from last year and the largest in twenty years.
But more apartments entering the marketplace could spell less interest in the homebuying market. “The huge number of apartments entering the market benefits all renters – but especially those in the country’s more expensive areas,” said Doug Ressler, Senior Analyst for Yardi Matrix, the organization that collected the data. “More apartments mean more choices–and, ultimately, more bargaining leverage for the renter.”
Aside from Lubbock, Manhattan saw the largest year-over-year change, dropping 3.1 percent to an average of $4,054. At the beginning of the year, rent averaged around $4,154. That number is expected to decrease even further as the year goes on, as there’s a total estimate of 7,000 new units to be delivered before year’s end.