by Calculated Risk on 8/01/2023 11:15:00 AM

Today, in the Calculated Risk Real Estate Newsletter: Asking Rents Negative Year-over-year

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).

The surge in household formation has been confirmed (mostly due to work-from-home), and this also led to the supposition that household formation would slow sharply in 2023 (mostly confirmed) and that asking rents might decrease in 2023 on a year-over-year basis (now flat year-over-year).
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Here is a graph of the year-over-year (YoY) change for these measures since January 2015. Most of these measures are through June 2023, except CoreLogic is through June and Apartment List is through July 2023.
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The CoreLogic measure is up 3.4% YoY in May, down from 3.7% in April, and down from a peak of 13.9% in April 2022.

The Zillow measure is up 4.1% YoY in June, down from 4.9% YoY in May, and down from a peak of 16.5% YoY in March 2022.

The ApartmentList measure is down at 0.7% YoY as of July, down from unchanged in June, and down from a peak of 18.1% YoY November 2021.
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With slow household formation, more supply coming on the market and a rising vacancy rate, rents will be under pressure all year.

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