www.reddit.com/r/Renters/comments/1cvs39y/landlord_raised_rent_100/
The Cooling in Apartment Rents Won’t Last Long
The consumer price data last week showed a gradual deceleration in housing inflation. Economists expect this will persist for a while as official statistics slowly catch up to moderating market rents. Before you celebrate, it’s worth noting the first-quarter earnings updates of major real estate investment trusts, or REITs, where executives painted a less optimistic picture for tenants.
Elevated levels of new supply are weighing on rents in many metros at the moment, but apartment REITs — which set the pace for the rental market in many wealthy and growing metro areas — are seeing some unexpected offsets. The upshot of their commentary suggests that by the time tamer readings of shelter inflation allow the Federal Reserve to consider cutting interest rates, real-time rent increases should actually make them question whether easing policy is the right idea.
The most significant unexpected dynamic supporting apartment demand — and hence occupancy and rents — that executives called out was the sharp drop in the number of people leaving rental apartments to move into homes they have bought. Coastal powerhouse AvalonBay Communities Inc. reported a record-low 7% turnover due to homebuying, compared with their long-term average of 16% to 17%. Essex Property Trust Inc. put the number at 5%, also a record low, versus their longer-term average of 12%.
I say unexpected because even though homebuying affordability has been bad for a while, the last time these companies reported earnings, in late January, it looked like homebuyers might catch a break in 2024. At that point, markets were still anticipating a fairly aggressive cycle of rate cuts from the Fed, and 30-year mortgage rates had declined to around 6.6%. Expectations of rate cuts have been dashed since then, and mortgage rates have risen above 7% to further worsen housing affordability.
www.bloomberg.com/opinion/articles/2024-05-20/cooling-apartment-rents-won-t-last-long
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