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Friday, June 02, 2023

Year-over-year Rent Growth Continues to Decelerate; Asking Rents Likely to be Down year-over-year in June or July

by Calculated Risk on 6/02/2023 11:59:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Year-over-year Rent Growth Continues to Decelerate

A brief excerpt:

Tracking rents is important for understanding the dynamics of the housing market. For example, the sharp increase in rents helped me deduce that there was a surge in household formation in 2021 (See from September 2021: Household Formation Drives Housing Demand). This has been confirmed (mostly due to work-from-home), and also led to the supposition that household formation would slow sharply now (mostly confirmed) and that asking rents might decrease in 2023 on a year-over-year basis.
Here is a graph of the year-over-year (YoY) change for these measures since January 2015. Most of these measures are through April 2023, except CoreLogic is through May and Apartment List is through May 2023.
Case-Shiller House Prices IndicesThe CoreLogic measure is up 4.3% YoY in March, down from 5.0% in February, and down from a peak of 13.9% in April 2022.

The Zillow measure is up 5.3% YoY in April, down from 6.0% YoY in March, and down from a peak of 16.9% YoY in February 2022.

The ApartmentList measure is up 0.9% YoY as of May, down from 1.8% in April, and down from a peak of 18.3% YoY November 2021.
My view is it is likely that we will see a year-over-year decline in asking rents sometime in the next couple of months.
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