For a while now, it’s been a good time to be a renter. The cost of renting of an apartment has been falling around the nation, and landlords have been quick to throw concessions at potential tenants. One to-remain-nameless Manhattanite even negotiated down the rent on her Greenwich Village apartment—a stunning victory in one of the country’s tightest markets.
Now the party may be coming to an end. A new report from the real-estate analytics firm Reis finds that in the first quarter, both asking and effective rents rose nationally, the first increase in more than a year. For the quarter, effective rents rose in 60 out of 79 markets tracked by Reis, with 10 markets, including Miami, Tucson, Memphis, Palm Beach and Seattle, seeing a gain of at least 1%.
That’s unfortunate for renters, but it may be a good sign for the rest of us.
That’s because one of the big drivers of what landlords can get rent-wise is household formation. More people looking for a place to live equals pricing power. And one of the big drivers of household formation? Employment!
Now, the folks at Reis are very careful to say that one quarter’s worth of data doesn’t necessarily make for a lasting trend. Plus, there are other factors that go into rents. For example, how many new apartment buildings are going up.
Still, the overall take from Reis is that the apartment sector will be one of the first to recover (from the point of view of landlords) as the overall economy emerges from recession. This is another reason to believe that may occur sooner rather than later.