Should You Fear Falling Rents?
Taken from May 15, 2019 Timing Letter
Rents don’t normally experience the wide
fluctuations seen in California housing prices, but you
should be aware that income from rental properties
can fall during economic and real estate downturns.
The tables below list the 12 most expensive
U.S. rental markets. The data is from Zumper, a San
Francisco based company that tracks “asking rents” for multi-family apartment buildings. Single-family homes for rent are not included.
In providing rental services to both tenants and landlords, Zumper collects its monthly data from over 1 million active listings of apartments-for-rent in the 100 largest U.S. rental markets.
Data shows median asking rents for one and two bedroom apartments in March 2019 – which mean half the apartments are advertised at higher rents and half at lower rents. Dates for peaks rents are also shown – and how much prices have changed since then.
San Francisco Rental Market
San Francisco is the most expensive major rental market in the U.S. Asking rents for 1-BR units in SF were up 8.8% YOY in March – sitting at record highs.
Rents in SF for 2-BR units were a different story. While up 2.0% YOY – they are 8.1% lower than their peak levels of Oct 2015.
Los Angeles Rental Market
In Los Angeles, the median 1-BR rent peaked in Dec 2018 – and has since fallen 3.7% from where it was in Dec 2018.
2-BR units in LA were down 2.5% YOY in March – and down 5.7% from their peak levels of June 2018.
San Diego Rental Market
In San Diego, the asking price for 1-BR units was up 2.2% YOY – yet down 5.8% from their Dec 2018 peak.
2-BR units in San Diego were up 3.4% YOY in March – but down 4.8% from where they were in Oct 2018.
New York and Honolulu Rental Markets
New York is the 2nd most expensive rental market in the U.S. 1-BR rents were down 1.7% YOY in March – and were 15.4% below their March 2016 peak. For 2-BR units,
NY asking rents were down 8.6% YOY in March, and are 19.6% below their peak of three years earlier.
Rents have gone down the most in Honolulu. Asking rents for 1-BR units are 20.2% lower than they were in March 2015 – and rents for 2-BR units are off their Jan 2015 highs by 24.4%.
There are few guarantees in life –
but none in real estate.
As shown in the March 2018 issue of my Timing Letter, residential rents along with housing prices both move up and down – and how well you do as an investor depends on being on the right side of those trends.
Comments/questions are always welcome -
and you can send them to Robert@RealEstateTiming.com