Tight supply and rising demand are still the forces driving the trend.
Higher rents are ahead next year for the nation’s apartment dwellers, but some cities will see smaller bumps than in recent years, market researchers say.
Rents will increase 3.1% nationally next year, about the same as this year, apartment market researcher Axiometrics says.
Meanwhile, researcher Reis sees rents rising an average of 3.3% in 2014.
Tight supply and rising demand are still the key drivers.
“The construction pipeline really closed during the recession. We’re still clawing our way back,” says Ryan Severino, Reis chief economist.
Cities that have seen some of the sharpest increases will see rents rise a little more slowly next year, says Jay Denton, Axiometrics vice president of research.
Since the end of 2009, rents have soared 43% in San Francisco, including an 8% jump this year, Denton’s data show.
Next year, they’ll rise 5.1% given still strong demand and limited new supply.
Seattle, which posted a 6.5% increase this year, will rise 4.4% next year. Austin, which rose 5.2% this year, will see an increase of 3.7%
Construction has been uneven across the country. Some major metros that have led the way in new construction are now at risk of having an oversupply of apartments.
Washington D.C., “has probably already gone over that cliff,” Denton says. Rents there will fall 2.5% next year, Axiometrics predicts.
Austin also has seen a lot of construction. “It’ll be difficult to raise rents there,” Severino says.
Nationwide, almost 230,000 new apartments will be added to the supply next year, Axiometrics says. That’s up from 170,000 this year and only 87,000 last year.
Any slowdown in rent increases will be good news for renters.
Half of all U.S. renters paid more than 30% of their income for rent — a traditional measure of affordability — in 2010, up 12 percentage points from a decade earlier, according to a recent study from Harvard’s Joint Center for Housing Studies.
Apartment rents have risen every year since 2010, market data shows.
Meanwhile, the share of Americans who rent grew from 31% in 2004 to 35% in 2012, the study says, driven in part by the foreclosure crisis.
Trevor Coccimiglio, 24, is looking to rent a room in a shared house in San Francisco for less than $1,200 a month. That’s about what his father pays to rent an entire house in suburban Salt Lake City.
“That’s just the cost,” says Coccimiglio, who has taken a new investment banking job.
He recently looked at a $900-a-month room in a 3-bedroom, 864-square-foot apartment. The parking space costs $75 extra a month.
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