Affordable Housing and Apartment Rent in the USA
If you want to find affordable rents in the USA, you have to look beyond New York City. While New York City is the leading contributor to rental increases in the country, you can find more affordable options in smaller metro areas. While New York City is still a hot market, there are signs that it is beginning to cool.
Rochester NY metro ranks number one for rent growth during the pandemic
Rent growth in Rochester, NY, a metro in the Finger Lakes region of New York State, has been the fastest of any metro in the country over the last five years. Since March 2020, rents in Rochester have increased by 45 percent, outpacing rent growth in the rest of the country. In the same time period, rents in the Tampa metro area have risen by only 5.9 percent.
Rent growth in the Rochester, NY metro area was largely unaffected by the coronavirus outbreak, which hit major metropolitan areas with high infection rates and overwhelmed medical systems. As a result, the housing market in Rochester, NY metro area has held steady, with landlords able to finish the year with high occupancy rates. Although some landlords have reduced rents to attract new tenants, many others have opted to increase their rents.
The pandemic caused a large number of relocations. According to the Rochester, NY metro area, 51,851 people contracted the disease. Of these, 1,154 died from the disease. This resulted in an even larger impact on the rental market. As a result, landlords in large markets reduced their rents to attract new renters.
New York City is the largest contributor to rental increases
Rent prices in the US continue to rise at the fastest pace in decades. Rents rose by a record 11.3 percent last year. While this may seem surprising, it should be considered in the context of the nation’s continuing decline in homeownership. As of 2018, the rate of homeownership in the USA was only 63.3 percent.
While the rent increase in New York City was the largest in the country last year, the trend isn’t unique to the city. In fact, rent in Jersey City rose by more than double the national average. Meanwhile, in NYC-proper, rent increased by 16.6 percent. And this trend is spreading across the country. Chula Vista, CA, Anchorage, AK, and Miami, FL are all experiencing rapid increases in rents.
According to Apartment List, the median asking rent in New York City increased by just over 4% from January to June this year, which is much faster than the average increase for the USA. However, there is no clear explanation for why rental prices are rising so quickly. There are many factors contributing to these high rents, including low inventory and high demand.
Smaller metro areas offer more affordable options
Many people who want to live in the USA can find affordable apartment rent and housing options in smaller metro areas. In fact, small metro areas are often more affordable than the larger metropolitan areas. These cities are located primarily outside of coasts, in the Midwest, Mountain West, and Southern regions. These locations often have lower land costs and more permissive zoning laws, making it easier to build new housing and renovate old ones.
Markets that had been booming are now showing signs of cooling off
In August, rents rose in 79 of the country’s 100 largest cities, but at a slower rate than in July. In fact, rent growth is slower than it was a year ago. Despite this, rent growth rates remain above five percent nationwide.
The housing and apartment rent markets had been booming, with apartment occupancy at an all-time high in the first quarter of 2019. Nationally, rents rose 15.2%, with many areas seeing even more. This demand was fueled in part by unprecedented wage growth.
The National Association of Realtors reports that the supply of new homes for sale and rental units is significantly smaller than the demand. That shortfall affects the supply of single-family starter homes and apartment rentals. Meanwhile, new construction is up, but supply chain delays are making homes take longer to finish. The cost of buying a home is still high, which is forcing many to stay in the rental market. A further problem is the emergence of a massive cohort of millennials eager to move out on their own.
The slowdown in housing prices in many markets is a symptom of a cooling off economy. While prices are still relatively high, competition for properties is more intense. Those in higher-end neighborhoods are competing for their homes with buyers willing to pay top dollar.