Even Seattle rents are under pressure from new construction. But rents are surging in mid-tier markets. Over the past few years, commercial real estate prices have boomed, and so has multi-family construction, enticed by dropping and desperately low rental vacancy rates that have pushed up rents. But vacancy rates bottomed out in Q2 2016 and have since turned up. In Q3 2017, the rental vacancy rate rose to 7.5%, the Census Bureau reported on Tuesday. While still low, it’s the highest rate in over three years:
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Rents have started to respond in the most expensive rental markets. In San Francisco, the most expensive major rental market in the US, the median asking rent for a one-bedroom apartment inched up 1.2% year-over-year to $3,420 but is down 6.8% from the peak in October 2015. For a two-bedroom, the median asking rent dropped 5.9% year-over-year to $4,500 and is down 10% from the peak.
These are asking rents in multifamily apartment buildings, that Zumperaggregated in its National Rent Report. Single-family houses or condos for rent are not included. And these asking rents do not consider incentives, such as ‘one month free’ or ‘two months free,’ which effectively slash the rent for the first year by another 8% or 17%. The data is based on ‘over one million active listings,’ Zumper explains in its methodology. Importantly, the data also includes asking rents from new construction.
This post was published at Wolf Street on Nov 1, 2017.
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