Apartment for rent sign in Cincinnati, photo by The Cincy Project.
Houses versus apartments for rent
Often, when we analyze the rental market in America, we and other industry analysts typically lump multi-family in with houses for rent, but analyzed separately, they paint quite a different picture.
This week, we charted the apartment rental trends in the ten largest American cities which reveals that although rents are on the rise across all unit sizes, most increases are gradual. Apartment communities are increasingly using complex systems like Rent Roll to determine rents taking into account availability in their property along with comparable properties and their availability, amenities within each unit, time on market and the like.
Often, houses for rent rely on a comparative market analysis from the MLS which accounts for these same factors, but relies on a professional to discern these factors. Also, rents are set by homeowners who have a personal attachment to a home and a pride that complexes pricing, and ultimately the price is set by the homeowner.
Increasingly, homeowners are becoming “accidental landlords” as they rent out their home to cover their mortgage and move into a less expensive home in an effort to avoid foreclosure.
Why rental house pricing is so erratic
Taking all of that into account, it is no wonder that rental trends for houses appear far less stable and predictable than apartments. There is no consistent national trend for houses, as many spiked in May, some are actually declining, while others are sharply increasing. In some cities, we are noticing a premium on larger apartments, most likely due to families losing their homes or becoming renters after selling a home to downsize.
Rentals are far more complex to analyze than residential sales, but take a look at the top ten largest cities and how house rents are performing on a local basis to get an idea of how it compares to your city.
Average house rents in New York City
over the last 12 months
Average house rents in Los Angeles
over the last 12 months
Average house rents in Chicago
over the last 12 months
Average house rents in Houston
over the last 12 months
Average house rents in Philadelphia
over the last 12 months
Average house rents in Phoenix
over the last 12 months
Average house rents in San Antonio
over the last 12 months
Average house rents in San Diego
over the last 12 months
Average house rents in Dallas
over the last 12 months
Average house rents in San Jose
over the last 12 months
Data source: RentBits.com.
Manhattan Beach Agent
July 30, 2011 at 4:43 pm
I recently read a news headline that declared rental prices are increasing across the country. Excited by the news, I check my local market in Los Angeles (Manhattan Beach), and was shocked to see that y-o-y median rents have fallen over 18%! Talk about erratic!
As an economist I'm used to seeing more efficient markets and smooth price movements, not the kind of disjoint movements we're seeing in our rental market.
I wonder if pricing tools will eventually work to smooth fluctuations, or if home owner landlords will continue to operate inefficiently?