Low supply and high demand rarely spell lower prices for consumers, and that imbalance continues to be on display in the US rental-housing market.
According to a recent survey of more than 500 rental property managers by Rent.com, 88% of respondents raised rents for tenants over the last 12 months.1
And they’re not done – 68% of the property managers estimated rents would rise next year, with an average forecast of 8% growth. That’s up from the 6% forecasted increase in 2014.
The median asking rent in the US rose by 6.2% to $803 a month in the second quarter of this year, according to data from the US Census Bureau cited by CNBC.com.
Vacancy rates for rental housing nationally dropped to a 20-year low of 6.8% in the second quarter, down from 7.5% in the year-earlier period, census data show.
At the same time, demand is increasing – 45% of managers in Rent.com’s survey said they saw more Millennials numbering their prospective tenant rolls, and 54% saw increased numbers of former homeowners looking to rent. At the same time, more renters appeared to be renewing their leases rather than moving, the survey found.
Rents and occupancies are hovering at historic highs as supply isn’t keeping up with demand. While apartment construction has seen strong growth over the past three years, construction of multifamily homes such as apartment buildings fell to next to nothing amid the housing bust, so new units are meeting with pent-up demand.
That formula has appeared to induce investors to bid up the stocks of publicly traded rental property operators. Over the past 12 months, the Renter Nation motif has risen 21.0%. In that same time, the S&P 500 has risen 9.9%.
In the past month, the motif has increased 10.0%; the S&P 500 is up 3.4%.