Apartment Rents Rise in Many Markets
- Mar 23, 2010
Dees Stribling, Contributing Editor
Washingon, D.C.–Apartment rents haven’t declined as much as commonly supposed, according to a report issued Tuesday by the Center for Housing Policy, the research arm of the National Housing Conference, an affordable housing advocate. In fact, says the study, they haven’t even gone down at all on average, with many markets still seeing increases.
Specifically, the study compares and ranks the costs of buying or renting a place to live in more than 200 U.S. metropolitan areas. It found that in most metro markets, fair market rents — usually defined by the Department of Housing and Urban Development as the 40th percentile of gross rents in a particular market — have held steady or increased, and occasionally surpass monthly mortgage payments for a median-priced home.
Rents increased in 89 percent of the markets studied, with only 23 metro areas experiencing a rent decrease. Places with the highest increases in rents between the fourth quarter of 2008 and the fourth quarter of 2009 include Knoxville, Tucson, Charleston, SC; Bakersfield, Calif., and Sarasota, Fla.
Rising rents are particularly noteworthy in Florida. While the income needed for homeownership has dropped more than 20 percent in 12 Florida markets since last year, typical two-bedroom rents across the state have risen, on average, nearly 6 percent–twice the median rent increase nationwide. At the same time, wages for many workers fortunate enough to still have jobs remained flat or decreased in numerous Florida markets.
“It’s hard to pinpoint one reason for the rental increases,” Maya Brennan, a senior research associate with the Center for Housing Policy, tells MHN.”But because of the trouble on the ownership side, rents are staying up. Workers who would be otherwise be homeowners are still renters because it’s much harder than it used to be to qualify for a mortgage, even though home prices have fallen in many places and interest rates are down.”
Moreover, she adds, despite the decline in housing prices nationwide, there are still plenty of markets in which housing remains expensive in historical terms, and out of reach, on average, for workers in a number of occupations. “All of these conditions contribute to higher demand for rental housing, and higher rents,” she says.
The most expensive rental market in the nation remains greater San Francisco. In 4Q08, fair-market rent for a two-bedroom apartment was $1,658 there; as of 4Q09, the rent for the same was $1,760. Likewise, the number-two and -three most expensive markets in 2008, Honolulu and Santa Cruz, Calif., maintained their positions in 2009.
Even at the bottom of the rental-rate list, two-bedroom fair-market rents edged up in some places year-over-year. In Wheeling, WV, the least expensive market among the 210 the study looked at, the rental rate was $577 in 2008; last year, it was $588. Other cheap-rent spots, such as El Paso and and Brownsville, Tex., and Lima, Ohio, and Waterloo, Iowa, also saw rents go up a few dollars.