Apartment Rents Are Still Too Darn High
Rents are rising more slowly, but in many places they are still painfully expensive.
Relief is on the way for hard-pressed apartment renters after several years of tight supply and rent hikes. Job growth will moderate, easing demand. Builders have delivered new units, with many more in the pipeline. Factoring in rent concessions, rents rose 3.7% in the second quarter, compared with the second quarter of 2015. That’s down from the blistering 5%-plus rate of a year earlier and closer to the long-term U.S. average of 2.2%, according to Axiometrics, a provider of apartment-market research. Markets where annual rent increases have slowed most include the Bay Area, Denver, Houston, New York City and Philadelphia.
San Francisco’s median monthly apartment rent is still a whopping $3,292. But last winter, rents there tracked by broker J. Wavro Associates fell by 8%—twice the usual off-season decline. And a rebound failed to materialize during the busy summer months, says Deborah Brown, a leasing and relocation specialist with the firm. She expects rents to fall further in 2017.
Renters typically encounter the least competition for apartments during the late fall and winter. That’s the best time to negotiate lower rents or other concessions—such as a free month or two of rent, a low security deposit, a period of free parking, or payment of gas and electric bills.
But even if some markets are no longer sizzling, many others are, including Sacramento, Seattle and Phoenix. And downtown luxury buildings that tempt baby boomers and millennials alike are still hot commodities anywhere. You might find better deals in the suburbs, or in smaller, older buildings that may be architecturally interesting but lack luxury amenities. A rental agent may know of unadvertised prospects. In a slowing market, a landlord may agree to pay all or part of an agent’s commission, which is typically equal to or slightly more than one month’s rent.