The rental market seems to be heating up across the country as the summer months open, with rental rates gradually increasing and vacancy rates going down. This growth may look smaller compared to what we’ve seen during the same period in 2021. But it still exceeds the numbers recorded from the pre-pandemic years.
For the first five months of 2022, rental rates went up by 3.9 percent, with the month-by-month growth since the start of the year pegged at 1.2 percent come May. As for the year-by-year growth, the May numbers indicate a 15.3 percent growth, slightly down from January’s 17.8 percent.
For comparison, May 2021’s month-by-month growth was at 2.2 percent, while 2021’s year-by-year growth is at 17.5 percent.
As for vacancies, the market is getting tighter. The vacancy index is now at 5 percent, rebounding from October 2021’s 4.1 percent.
While 96 of the 100 biggest cities in the US saw an increase in rental rates and a decrease in vacancies by May 2022, some cities experienced this growth more quickly than others. For a handful of cities, such as San Francisco, CA, and Scottsdale, AZ, rental rates actually cooled down. The San Francisco Bay Area is particularly sluggish, with rent growth at -3 percent.
According to experts, the main factor driving these changes in numbers is offices reopening to a semblance of pre-pandemic normalcy after a couple of years of remote work. Young individuals who have opted to live with their parents or stay with friends to wait out the pandemic are looking to strike out on their own once more. Families who have chosen to move to less expensive neighborhoods are also returning to the job centers.
On the other hand, the trends show that landlords and property managers won’t have trouble with vacancies. Current tenants choose to stay put and take advantage of the lower rental rates they got at the start of 2020. Additionally, labor and construction supply shortages are slowing down new home construction. This will keep would-be homebuyers within the rental market, at least for this year.
Illume Property Partners keeps abreast of trends in the rental and property management market to better serve our clients. Work with us and take advantage of the top-notch services we offer in the Portland metro area.