8/30 latest ✨ The US apartment rent report is finally negative compared to the previous year that was long-awaited ‼️
⭐️ Good evening, it's Brother Pau. Thank you for always being with us.
Well, according to the latest US apartment rent report announced today, Pow is finally negative compared to the previous year. Rents are reflected one year late in the CPI we usually pay attention to, and they have just reached their peak at last. Real has finally turned negative, so Pow is helpful as a leading indicator. Investors should welcome the fact that rents with such high adhesiveness have steadily declined as a time lag in interest rate hikes. This report describes trends in apartment rents in the US in great detail, and the content is worth reading quite a bit. While firmly grasping these positive precursor materials, Pow wants them to be useful for future investment strategies.
Full text with Japanese translation
“2023/9 Apartment List Nationwide Rent Report”
The rental market continued to slow down this month, and growth in both annual rents and monthly rents turned negative.
This is the first time since the outbreak of the pandemic that annual rents have turned negative. In other words, it is 1.2% cheaper than a year ago on the national average. This means that the annual rent increase rate has reached close to 18% nationwide, and has decelerated significantly since recent years, when it had soared to 40% or more in a handful of popular cities.
Furthermore, monthly rent growth turned negative this month, indicating that a sluggish period in the rental market has begun. The overall national wage index for August fell 0.1% and turned negative one month earlier than last year.
Fluctuations in rent are greatly influenced by the balance between the number of vacancies and the number of people who wish to move in. In 2021 and 2022, a significant shortage of vacant units boosted a significant increase in rents, but now the opposite is true. Our vacancy index has been rising for 22 consecutive months and is currently at 6.4%, slightly above the pre-pandemic average1. Furthermore, since the number of apartments under construction is at a record high, the vacancy rate is expected to remain steady over the next few months.
At the regional level, rents in August fell month-on-month in 53 of the 100 largest US cities, but thanks to sluggish rent growth over the past 12 months, 72 out of these 100 cities have declined compared to the same month last year.
The deceleration in the rental market is finally reflected in the inflation rate
The main indicator of inflation in the US is the Bureau of Labor Statistics Consumer Price Index (CPI), which is greatly influenced by fluctuations in housing prices. Due to these methodological differences, when this index peaked at a record rent increase rate (+17.8%) in 2021, the rent component of CPI was just beginning to pick up steam. As of 2023, according to this index, the rental market has cooled down rapidly since a year ago, but the housing component of CPI has only recently reached its peak. Despite the fact that the CPI housing inflation index remains high, top-line inflation has already substantially cooled down. The CPI housing index is slowly beginning to reflect the cooling that has been previously reported, and will help further curb topline inflation over the next few months.
CPI 2023 09
Rent decreased 0.1% from the previous month and 1.2% from the previous year
Generally, rents rise from spring to summer and fall from fall to winter. However, since August rents fell 0.1% this year, it seems that the slow season began one month earlier.
RG MOM 2023 09
This is a significant decline compared to the past 5 years. From 2018 to 2022, the national rent increase rate in August was usually positive by a few percent, and jumped significantly in 2021, which was a period of rapid rent inflation.
RG 2023/8
Compared to the same month last year, rents have fallen 1.2%. Nationwide rent growth has been negative since the beginning of the pandemic, when the rental market was shaken by a drastic decline in household formation, and demand for apartments declined drastically, particularly in dense urban centers. Due to seasonal trends, monthly rent growth will continue to slow throughout this year, and there is a possibility that annual rent growth will sink further into a negative zone in the next few months.
RG_YOY_2023_09.PNG
Year-to-date, rents have risen 2.5%, and with the exception of 2020, there is a slowing trend from all previous years measured by this index. In the steady period from 2017 to 2019, the average rent increase rate from January to August was 4.3%, and during the rapid inflation period from 2021 to 2022, the average was 11.0%. However, this year, in addition to sluggish demand, prices have been held back by a strong supply of new inventory entering the market. The sharp rise in rents seen from 2021 to early 2022 is now completely a thing of the past.
rg_ytd_2023_09.png
Apartment vacancy rates return to pre-pandemic levels
The price fluctuations that have shaken the rental market over the past three years are largely due to changes in apartment availability. In the early days of the pandemic, many Americans consolidated their households amidst massive unemployment and economic unease, and lived with their families, so the vacancy index for apartment listings rose to 6.8%. After that, the rental market suddenly became tight, and in 2021 and 2022, more households began to compete for the number of vacant units that were declining, and rents rose rapidly. The vacancy index shrunk from 6.8% to 3.9% in just over a year 3.
Vacancy rate_2023_09.png
However, with 2021/10 at the bottom, the national vacancy index has been steadily easing for over a year and a half. The apartment vacancy rate has been rising for 22 consecutive months, and the index reached 6.4% in August, surpassing the pre-pandemic level and approaching the peak of the pandemic set in 2020.
This mitigation has begun to level off slightly in recent months, but there is a high possibility that the vacancy rate will continue to rise in the future. New apartment construction is recovering from pandemic-related turmoil, and there are more apartment complexes currently under construction than at any point since 1970. Since such new inventories will continue to hit the market from the end of this year to next, we are entering a stage where real estate owners compete with borrowers to fill rental housing.
Vacancy trends are extremely local, and it is an important indicator showing that regional market conditions across the United States are rapidly changing through the pandemic (global pandemic). To explore this topic in more detail, we've made monthly vacancy data for hundreds of cities, metropolitan areas, and states available for download, and easily linked to our existing rent estimates using Federal Information Processing System (FIPS) codes.
Rents fell month-on-month in 53 of the 100 largest cities, and rents fell year-on-year in 72 cities
The figure below visualizes monthly rent fluctuations in each of the 100 largest US cities from January 2019 to the present. The color of each cell indicates the extent to which prices in a given city have risen (red) or fallen (blue) in a given month. A typical seasonal pattern was seen in 2019, and then in 2020, dark blue horizontal bands indicate that rents have plummeted in some of the largest and most expensive cities in America. Meanwhile, the dark red bands in 2021 and 2022 indicate a heatwave where rents have risen nationwide. However, the rightmost column of the chart shows recent rent cooling in the latter half of 2022 and moderate rent growth so far in 2023.
rg_top100_2023_09.png
Just as nationwide rent growth in August was negative, city-level rent growth was also negative in more than half of the 100 largest US cities. Furthermore, rents have declined compared to the same month last year in 72 of these large cities, and the number of cities falling negative each time data is updated is increasing.
neg_yoy_count_2023_08.png
At the beginning of 2022, all 100 cities recorded positive year-over-year results. The first thing that turned negative was the early “Zoom Town” in states such as Arizona, Nevada, and Idaho. Later, large cities, such as California, most of the west coast, Texas, and the southeast, joined this trend. Currently, the fastest year-on-year decline is Oakland, California, which has fallen 8.7% compared to August last year.
twitter_map_2023_08.png
The cooling of the spreading sun belt
At the city level, year-over-year declines in rents are common in the Sunbelt metropolitan area, with Austin, Las Vegas, and Phoenix at the top, with a 5% drop over the past year. In these three cities, although the year-on-year rate of increase in rents once exceeded 20% in 2021, it has cooled down rapidly thereafter. It is also important that the Austin metropolitan area allows new housing at the fastest pace among metropolitan areas in the same state, suggesting that construction plays an important role in managing long-term affordability.
metro_slowest_2023_09.png
The Portland, Seattle, and San Francisco metropolitan areas also recorded the lowest year-over-year growth rates in the United States, which suggests that market slump is not limited to vast high-growth metropolitan areas. These high density markets first decelerated in 2020 and are still slowing now. Portland, in particular, is ranked in the top 10 as the city where rent growth has slowed the most in the past 6, 12, and 36 months, indicating that regional rent growth has slowed during the pandemic period.
Midwest and Northeast markets maintain positive rent growth
Meanwhile, the Midwest and New England have seen the fastest rent growth recently. Most of the cities that ranked high in rent growth rates over the past 6 and 12 months, such as Chicago, Cincinnati, and Boston, are located in this region. Of course, considering that the rental market has cooled down recently, growth in these cities has been relatively moderate compared to around this time last year.
metro_fastest_2023_09.png
If you look at it over a long period of 3 years, even if many subways cool down in 2023, the fastest rent growth is concentrated in the Sun Belt region. Miami and Tucson are the only cities where the three-year rent increase rate exceeds 40%, but neighboring Tampa, Orlando, and Phoenix are also in the top 10. North Carolina is also a state where rental demand has flowed in rapidly during the pandemic process, and as a result, prices have risen by approximately 30% since 2020/8 in the Raleigh and Charlotte metropolitan areas.
conclusions
The rent decline rate of 0.1% in August meant that the sluggish period in the rental market had already begun, and the rent increase rate compared to the same month last year was at a low level since the beginning of the pandemic. Demand will decline throughout the year, and since supply is improved by a steady construction pipeline, it is expected that rent growth by the end of the year will cool down further.
The rental market continued to slow down this month, and growth in both annual rents and monthly rents turned negative.
This is the first time since the outbreak of the pandemic that annual rents have turned negative. In other words, it is 1.2% cheaper than a year ago on the national average. This means that the annual rent increase rate has reached close to 18% nationwide, and has decelerated significantly since recent years, when it had soared to 40% or more in a handful of popular cities.
Furthermore, monthly rent growth turned negative this month, indicating that a sluggish period in the rental market has begun. The overall national wage index for August fell 0.1% and turned negative one month earlier than last year.
Fluctuations in rent are greatly influenced by the balance between the number of vacancies and the number of people who wish to move in. In 2021 and 2022, a significant shortage of vacant units boosted a significant increase in rents, but now the opposite is true. Our vacancy index has been rising for 22 consecutive months and is currently at 6.4%, slightly above the pre-pandemic average1. Furthermore, since the number of apartments under construction is at a record high, the vacancy rate is expected to remain steady over the next few months.
At the regional level, rents in August fell month-on-month in 53 of the 100 largest US cities, but thanks to sluggish rent growth over the past 12 months, 72 out of these 100 cities have declined compared to the same month last year.
The deceleration in the rental market is finally reflected in the inflation rate
The main indicator of inflation in the US is the Bureau of Labor Statistics Consumer Price Index (CPI), which is greatly influenced by fluctuations in housing prices. Due to these methodological differences, when this index peaked at a record rent increase rate (+17.8%) in 2021, the rent component of CPI was just beginning to pick up steam. As of 2023, according to this index, the rental market has cooled down rapidly since a year ago, but the housing component of CPI has only recently reached its peak. Despite the fact that the CPI housing inflation index remains high, top-line inflation has already substantially cooled down. The CPI housing index is slowly beginning to reflect the cooling that has been previously reported, and will help further curb topline inflation over the next few months.
CPI 2023 09
Rent decreased 0.1% from the previous month and 1.2% from the previous year
Generally, rents rise from spring to summer and fall from fall to winter. However, since August rents fell 0.1% this year, it seems that the slow season began one month earlier.
RG MOM 2023 09
This is a significant decline compared to the past 5 years. From 2018 to 2022, the national rent increase rate in August was usually positive by a few percent, and jumped significantly in 2021, which was a period of rapid rent inflation.
RG 2023/8
Compared to the same month last year, rents have fallen 1.2%. Nationwide rent growth has been negative since the beginning of the pandemic, when the rental market was shaken by a drastic decline in household formation, and demand for apartments declined drastically, particularly in dense urban centers. Due to seasonal trends, monthly rent growth will continue to slow throughout this year, and there is a possibility that annual rent growth will sink further into a negative zone in the next few months.
RG_YOY_2023_09.PNG
Year-to-date, rents have risen 2.5%, and with the exception of 2020, there is a slowing trend from all previous years measured by this index. In the steady period from 2017 to 2019, the average rent increase rate from January to August was 4.3%, and during the rapid inflation period from 2021 to 2022, the average was 11.0%. However, this year, in addition to sluggish demand, prices have been held back by a strong supply of new inventory entering the market. The sharp rise in rents seen from 2021 to early 2022 is now completely a thing of the past.
rg_ytd_2023_09.png
Apartment vacancy rates return to pre-pandemic levels
The price fluctuations that have shaken the rental market over the past three years are largely due to changes in apartment availability. In the early days of the pandemic, many Americans consolidated their households amidst massive unemployment and economic unease, and lived with their families, so the vacancy index for apartment listings rose to 6.8%. After that, the rental market suddenly became tight, and in 2021 and 2022, more households began to compete for the number of vacant units that were declining, and rents rose rapidly. The vacancy index shrunk from 6.8% to 3.9% in just over a year 3.
Vacancy rate_2023_09.png
However, with 2021/10 at the bottom, the national vacancy index has been steadily easing for over a year and a half. The apartment vacancy rate has been rising for 22 consecutive months, and the index reached 6.4% in August, surpassing the pre-pandemic level and approaching the peak of the pandemic set in 2020.
This mitigation has begun to level off slightly in recent months, but there is a high possibility that the vacancy rate will continue to rise in the future. New apartment construction is recovering from pandemic-related turmoil, and there are more apartment complexes currently under construction than at any point since 1970. Since such new inventories will continue to hit the market from the end of this year to next, we are entering a stage where real estate owners compete with borrowers to fill rental housing.
Vacancy trends are extremely local, and it is an important indicator showing that regional market conditions across the United States are rapidly changing through the pandemic (global pandemic). To explore this topic in more detail, we've made monthly vacancy data for hundreds of cities, metropolitan areas, and states available for download, and easily linked to our existing rent estimates using Federal Information Processing System (FIPS) codes.
Rents fell month-on-month in 53 of the 100 largest cities, and rents fell year-on-year in 72 cities
The figure below visualizes monthly rent fluctuations in each of the 100 largest US cities from January 2019 to the present. The color of each cell indicates the extent to which prices in a given city have risen (red) or fallen (blue) in a given month. A typical seasonal pattern was seen in 2019, and then in 2020, dark blue horizontal bands indicate that rents have plummeted in some of the largest and most expensive cities in America. Meanwhile, the dark red bands in 2021 and 2022 indicate a heatwave where rents have risen nationwide. However, the rightmost column of the chart shows recent rent cooling in the latter half of 2022 and moderate rent growth so far in 2023.
rg_top100_2023_09.png
Just as nationwide rent growth in August was negative, city-level rent growth was also negative in more than half of the 100 largest US cities. Furthermore, rents have declined compared to the same month last year in 72 of these large cities, and the number of cities falling negative each time data is updated is increasing.
neg_yoy_count_2023_08.png
At the beginning of 2022, all 100 cities recorded positive year-over-year results. The first thing that turned negative was the early “Zoom Town” in states such as Arizona, Nevada, and Idaho. Later, large cities, such as California, most of the west coast, Texas, and the southeast, joined this trend. Currently, the fastest year-on-year decline is Oakland, California, which has fallen 8.7% compared to August last year.
twitter_map_2023_08.png
The cooling of the spreading sun belt
At the city level, year-over-year declines in rents are common in the Sunbelt metropolitan area, with Austin, Las Vegas, and Phoenix at the top, with a 5% drop over the past year. In these three cities, although the year-on-year rate of increase in rents once exceeded 20% in 2021, it has cooled down rapidly thereafter. It is also important that the Austin metropolitan area allows new housing at the fastest pace among metropolitan areas in the same state, suggesting that construction plays an important role in managing long-term affordability.
metro_slowest_2023_09.png
The Portland, Seattle, and San Francisco metropolitan areas also recorded the lowest year-over-year growth rates in the United States, which suggests that market slump is not limited to vast high-growth metropolitan areas. These high density markets first decelerated in 2020 and are still slowing now. Portland, in particular, is ranked in the top 10 as the city where rent growth has slowed the most in the past 6, 12, and 36 months, indicating that regional rent growth has slowed during the pandemic period.
Midwest and Northeast markets maintain positive rent growth
Meanwhile, the Midwest and New England have seen the fastest rent growth recently. Most of the cities that ranked high in rent growth rates over the past 6 and 12 months, such as Chicago, Cincinnati, and Boston, are located in this region. Of course, considering that the rental market has cooled down recently, growth in these cities has been relatively moderate compared to around this time last year.
metro_fastest_2023_09.png
If you look at it over a long period of 3 years, even if many subways cool down in 2023, the fastest rent growth is concentrated in the Sun Belt region. Miami and Tucson are the only cities where the three-year rent increase rate exceeds 40%, but neighboring Tampa, Orlando, and Phoenix are also in the top 10. North Carolina is also a state where rental demand has flowed in rapidly during the pandemic process, and as a result, prices have risen by approximately 30% since 2020/8 in the Raleigh and Charlotte metropolitan areas.
conclusions
The rent decline rate of 0.1% in August meant that the sluggish period in the rental market had already begun, and the rent increase rate compared to the same month last year was at a low level since the beginning of the pandemic. Demand will decline throughout the year, and since supply is improved by a steady construction pipeline, it is expected that rent growth by the end of the year will cool down further.
original text
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ネコくまモン : Brother Pow, I always refer to his sharp explanations. As for this article, the title of the chart posted in the original text (file name?) It's only made up of, and if you don't contrast it with the original text as it is, you won't be able to see the chart!
→If it were done, wouldn't it be possible to post the chart as an image, right? Kashiko!
パウ兄 OP :
パウ兄 OP パウ兄 OP :
パウ兄 OP ネコくまモン : I've attached an image Pow
ネコくまモン パウ兄 OP : Thank you so much!