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Apartment rents fall as new supply hits market
- chizhik-pyzhik 4y agoThe article says rents are falling while housing prices are remaining stable. I wonder if this means we'll start to see a lot of apartments convert to condominiums to equalize this imbalance?
- xyzelement 4y agoProbably some. A house and an apartment you own aren't really comparable anymore as the appeal of urban living for professionals has declined, however. Probably most likely impact is the decline on new apartment development and perhaps dilapidation of some of the stock ("if I can't get 3k/month for this place anymore, fine I'll charge 2k but I won't bother maintaining it")
- sacrosancty 4y agoIsn't it the other way round? When rents are higher, how well maintained the house is matters less to tenants compared to the location and rent. But when rents are low, they have more freedom to choose a well maintained house. If you're talking about long-term maintenance so that skipping it is just deferring costs to greater costs in the future, then why would a landlord do that unless they expect to demolish the house before ever fixing it up?
- deleted 4y ago[deleted]
- autoexec 4y ago> When rents are higher, how well maintained the house is matters less to tenants When I'm paying more than I think I should in rent I start expecting more for my money. Suddenly I want every little thing fixed and I push for things like newer appliances. When rent is low and I feel like I'm getting a really good deal, I'm much more willing to let the little stuff slide.
- sacrosancty 4y agoYou're acting the opposite to the power you have. I think people overall act in line with their power. High rents means tenants are weaker and can demand less without being told "take it or leave it".
- CrunchyJams 4y agoRental units generally change hands much more frequently than owned homes. Accordingly, rental units offer a more real-time view of housing cost trends. There are also a lot of homeowners who locked in at a very low interest rate (both new homes and refinancing) with little incentive to move any time soon.
- paxys 4y agoWhat's the difference between the two? Every rental unit is ultimately owned by someone. And if rents are falling but your equity is rising, you are still coming out ahead.
- enjo 4y agoThe big issue is that condos come with a bunch of additional issues surrounding mortgages. Along with very different maintenance models. It's one of the hidden problems of the housing shortage: condos are very difficult to get financing for which artificially deflates the market for them. Which means that our best form of housing in terms of the efficiency of building units isn't terribly attractive to actually build.
- alistairSH 4y agoAre condos really the best form of housing? I’d guess apartments were better, in as much as the build cost is similar, but the resident has far more flexibility. Owning a condo when the building hits ~50 years old or so is problematic because of the massive influx of cash needed to replace mechanical systems (or worse).
- ghaff 4y agoRenting is always going to be more flexible/mobile. But you can also be kicked out at any time, your rent can often be raised somewhat arbitrarily, and you're probably limited in the degree to which you can modify your unit. (And you'll always be paying rent.)
- deleted 4y ago[deleted]
- alistairSH 4y agoDepends on the ownership structure. A lot of large apartment buildings are single-owner/single-management with all units rented. Usually some sort of corporate owner. Condo buildings might have id rentals offered by individual owners. The former is (possibly) more likely to ask questions like “is it better to sell the whole building in the face of falling revenue?” The latter, if their mortgage is lower than rental income, might just hold the unit regardless of the unit’s value. Probably a much less sophisticated owner/landlord than a big corporation.
- michaelbarton 4y agoSomewhat related: there was a discussion on NPR about how new builds will likely be much more popular because of rising interest rates. The cause is that there will be a much smaller supply of previously owned homes because owners won’t want to refinance at the much higher rates at the moment.
- scarface74 4y agoAccording to Slate Money, the reason that new builds are in more demand is that builders have programs that will reduce the interest rate by around 2% making the mortgage lower than a similar price existing home.
- paxys 4y agoThe cost of raw materials and labor has gone up a lot more than interest rates in the last couple years.
- ivalm 4y agoBut at least in hcol areas the cost of the house is in land value, so if that goes down you can pay more for labor and materials while charge less for the finished product. That $2M 1800sqft house is not priced on labor and materials.
- loandbehold 4y agoCost of labor is a large part of why housing is expensive in hcol areas. Workers that make $15/hour in Dallas are making $45/hour in Los Angeles.
- ivalm 4y agoI originally didn’t think it’s a big effect but apparently per sqft new construction sfh in CA is $500 and in TX is $100. That’s insnane (so 2000sqft new construction costing $1M vs $200k).
- paulcole 4y agoNYT had an article about this recently: https://www.nytimes.com/2023/02/24/realestate/florida-condo-deconversions-lawsuit.html https://www.nytimes.com/2023/02/24/realestate/florida-condo-...
- __derek__ 4y agoIn Seattle, a converted apartment will generally have much lower build quality (e.g., wood walls rather than concrete), so it's not going to appeal to someone in the market for a purpose-built condo. The business of selling condos is also significantly less attractive to developers.[1] [1]: https://kuow.org/stories/why-are-condos-in-seattle-so-rare-and-expensive https://kuow.org/stories/why-are-condos-in-seattle-so-rare-a...
- Gigachad 4y agoReverse going on in Australia right now. International students have returned and a semi decent 2 bedroom apartment is now averaging $800/pw in Melbourne.
- fallingfrog 4y agoPw=per week? I ask because in the US rent is typically monthly
- ggm 4y agoHousing here is insane. We need long leases, tenants on body corporate, and rent price controls. Really.. what we need is sustained investment in state housing, which all the states gave up on during the post-keating privatisation storm. They don't understand their role as provider of socialised influence in the rental market. Its been left to private sector and 'negative gearing' tax breaks for investor-owners fuel the insanity. Now, with so many private owners vested, they are unwilling to risk voter backlash to undo the madness of 25+ years of bad planning. In Queensland, they had a really stupid relationship with cooperative housing movements, co-owning properties in the inner city. Then they realized the huge value proposition in the land, booted the tenants out to cheaper outer suburbs and realized the capital gain. It sucks. Gutting suburbs like west end in Brisbane where I live did nobody any favours. Why shouldn't working class people live in the inner city too? They always used to! (I'm an owner occupier. I just think rental madness in Australia is sucking life force out of younger people) Everybody loves to hate on socialised housing but the alternatives are far far worse.
- jonny_eh 4y agoI hate the framing of the headline making it sound like a negative. "Crush" is surely a negative.
- DiggyJohnson 4y agoI wouldn’t worry about the connotation of a headline like this too much: hate isn’t good for you. Just understand the information it conveys and move on from there.
- mostlysimilar 4y agoGood advice in general, but there's additional information coded in the words chosen. It shouldn't be a surprise that the Wall Street Journal would see falling rents as a "crush" given it's readership probably leans more towards landlord than tenant.
- DiggyJohnson 4y agoYea, I do see that coded language, I just guess I’m a bit tired of picking apart language instead of discussing content. I’m not surprised at the headline for the same reason as you: “given its readership probably means more towards landlord than tenant.”
- consumer451 4y agoI would imagine that an editor chooses headlines based on their readership, would they not? My judgement may be off here, but is a WSJ reader more likely to be a landlord or a tenant?
- tomrod 4y agoGoes both ways I reckon. A lot of folks rent.
- MichaelZuo 4y agoIt's a bit surprising for the WSJ to include obviously clickbait words in their headlines.
- warning26 4y agoIt's almost as if supply and demand is a real principle that exists and applies to housing. Who would have thought? Seriously though, I find it baffling how many people are completely adamant that housing costs are completely fixed (usually by some kind of shadowy cabal of landlords), and are not subject to market forces whatsoever.
- roym6 4y agohttps://www.propublica.org/article/yieldstar-rent-increase-realpage-rent https://www.propublica.org/article/yieldstar-rent-increase-r...
- Redoubts 4y ago> What role RealPage’s software has played in soaring rents — which in the decade before the pandemic nearly doubled in some cities — is hard to discern. Inadequate new construction and the tight market for homebuyers have exacerbated an existing housing shortage. K.
- warning26 4y agoYup -- I love that people always point to RealPage's existence as some sort of smoking gun that proves literally every landlord is colluding with one another.
- crooked-v 4y agoAlso, even if it were proof that every current landlord was colluding, the easiest solution to that would be... to build a lot more housing, to severely dilute the power of current landlords.
- davidw 4y ago> I find it baffling Housing Breaks People’s Brains: "Supply skepticism and shortage denialism are pushing against the actual solution to the housing crisis: building enough homes." https://www.theatlantic.com/ideas/archive/2022/11/us-housing-supply-shortage-crisis-2022/672240/ https://www.theatlantic.com/ideas/archive/2022/11/us-housing...
- pessimizer 4y agoOr apartment rents fell after a massive cycle of aggressive rent raising after landlords got free of temporary rent control after the pandemic, and the most aggressive landlords lost their tenants to landlords who were less aggressive.
- peoplearepeople 4y agohttps://archive.ph/w29ut https://archive.ph/w29ut
- MobileVet 4y agoThe number of 6 story high apartment complexes with massive footprints that have gone up in our university town is amazing. I need to find the raw numbers and compare that with the current population, but it is substantial. Honestly, I have been wondering for several years now who is going to fill all these apartments. The scale of increase is really that big. Maybe the answer is… no one?
- enjo 4y agoThe United States has added 100 million people since 1995. The pace of building hasn't even come close to that. The best estimates I can find is that we've added about 30 million units in that same period. The answer to your question is: the people already there. The cost of housing has spiked because we've let supply get low after all.
- nostromo 4y agoThe Fed tracks this. Housing units per person really has not moved much since 2000 either way. We're basically near the median for the 20-year period. https://fred.stlouisfed.org/graph/?g=j9kB https://fred.stlouisfed.org/graph/?g=j9kB One big issue not stated in the graph however is that the amount of childless people and people living alone is up, so we require more housing to match changing preferences.
- spicyusername 4y agoI can't help but notice that data doesn't go back very far. It's a shame we can't compare to 1920, 1950 or 1970.
- JumpCrisscross 4y ago> shame we can't compare to 1920, 1950 or 1970 We only started collecting information on housing in 1940 [1]. That's why household data only go back that far [2]. [1] https://www.census.gov/history/www/through_the_decades/overview/1940.html https://www.census.gov/history/www/through_the_decades/overv... [2] https://www.census.gov/data/tables/time-series/demo/families/households.html https://www.census.gov/data/tables/time-series/demo/families...
- eduction 4y agoStory says rents in February are lower than in August. Duh? Landlords don’t put units on the market in winter if they can help it. When the article discloses year over year figures, sure enough, rents are still rising. (Supposedly “decelerating.” No details given.)
- atdrummond 4y agoIf they don’t put units on the market in winter, that would keep rates higher, not lower.
- prpl 4y agothe is less demand though (people don’t like to move in winter/mid school year)
- rch 4y agoExactly. It reads like the author is trying to frame seasonal effects as something else.
- jejeyyy77 4y agocries in Canadian
- briga 4y agoSeriously. According to [1] rent in Calgary has increased 39% (!!) compared to last year. Still below Toronto and Vancouver, but pretty ridiculous. [1] https://www.zumper.com/rent-research/calgary-ab https://www.zumper.com/rent-research/calgary-ab
- digianarchist 4y ago“I’m leaving Toronto” is almost a meme at this point.
- foxfired 4y agoFor once, this directly affect me. I've been looking for a place since November 2022 in Los Angeles and it's the opposite that I see. In November, I'd find 4 bedrooms for $3800 (2000+sqf). I thought it was expensive, but someone always got it before me. Now we are in March and I can't find anything reasonably close with 4 bedrooms for less than $4,500. And again, someone is always snatching these before I get them. Maybe when you average out all the prices it seems to be going down. But browsing through the zill/apt/red/etc. does feel like prices are going up. ... still looking for a place by the way
- ttul 4y agoThe rental market varies considerably from market to market. Where I live, there seems to be no end in sight for rental increases.
- toomuchtodo 4y agoI own a few rental properties. During my last renewal cycle, I kept rent flat and every single tenant renewed no questions asked. A friend was competing with 30 other people for a townhouse rental for them and their two kids.
- Arainach 4y ago4br isn't exactly a common scenario in the apartment market. I doubt there are enough of them to even make a dent in overall statistical analysis.
- jlhawn 4y agoThe latest episode of the Odd Lots Podcast (Feb. 27, 2023) titled "Why We Don't Build More Apartments for Families" > On this episode of the Odd Lots podcast, we explore the hidden incentives and regulations that deter builders from making more family-friendly buildings.
- rcme 4y agoI have friend who own apartments for rent. They have a rule that they’ll never buy large apartments and they’ll never rent to families. Their reasoning was that: 1. Families who rent are likely unstable because, all else equal, a family would prefer to own due to the stability owning provides. 2. It’s too heartbreaking to evict a family. Just a random anecdote
- 8f2ab37a-ed6c 4y agoCries in San Francisco. I get the sense that "rents falling" is a narrative that manages to consistently skirt popular urban centers like SF, LA, NYC and co.
- somsak2 4y agosf rents have stayed below pre covid highs for a while now -- https://www.zumper.com/rent-research/san-francisco-ca https://www.zumper.com/rent-research/san-francisco-ca
- eloisant 4y agoRent went down because people left, and they did because (1) remote work is way bigger than before and (2) housing price are still incredibly high. I suspect that is the SF housing prices were not that high to begin with, not that many people who have left when remote became possible.
- erispoe 4y agoYeah, because San Francisco barely builds anything.
- jmugan 4y agoThere's supply and demand, but there's also cost and risk. I wonder if landlords have raised rents because they now more heavily weigh the possibility that the tenant might not pay.
- etempleton 4y agoHousing prices are very much priced based on supply and demand. When supply is constrained, for whatever reason, prices go up. You have a couple things happening right now that are constraining supply: 1. Building has never fully recovered from the last housing crises. 2. Banks own way too much real estate and that leads to a level of price control if for no other reason then they can afford to be patient. 3. Speaking about the USA in particular, there is a lot of NIMBYism. If you want to decrease prices build more. Don’t worry if it is low income or high income, just build more and prices will go down. It is unrealized revenue to let apartments sit empty and most private sellers can’t afford nor want to keep paying property taxes on a home that won’t sell.
- balderdash 4y agoI’d add that building more is not the only solution to increasing supply: some societal and zoning changes, like bringing back boarding houses would make a meaningful impact on supply. Apparently 1/3-1/2 of urban dwellers either rented a room or were a boarder [1] in the 18th century. [1]https://en.m.wikipedia.org/wiki/Boarding_house https://en.m.wikipedia.org/wiki/Boarding_house
- aschearer 4y agoSeeking to return to the living conditions of the 18th century is a bold policy position!
- dchftcs 4y agoWell, yeah, what century's living conditions does homelessness correspond to?
- defrost 4y ago19th Century Victorian London - the time of coffin beds and T'penny hangers (hard benches with a rope to hang your body across as you slept sitting upright). https://www.theguardian.com/artanddesign/2015/jan/02/homelessness-victorian-london-exhibition-geffrye-museum https://www.theguardian.com/artanddesign/2015/jan/02/homeles... https://www.jack-the-ripper-tour.com/generalnews/the-homeless-of-victorian-london/ https://www.jack-the-ripper-tour.com/generalnews/the-homeles...
- paulpauper 4y agohardly any decline https://archive.ph/w29ut/60a10ca91e1e9765852ba9fb0e5f64767903ef92.png https://archive.ph/w29ut/60a10ca91e1e9765852ba9fb0e5f6476790... It will be back to new highs soon enough Rent has always been expensive in America, especially since 2008. Overseas way cheaper even after accounting for lower cost of living. Part of the reason rent is so high in America is due to the difficulty of evictions and increased regulation. Landlords have to pass these costs to renters. Landlords need multi-month deposits plus credit checks. It's tough being a renter, for sure.
- MrMan 4y agooh no the housing crisis
- jobs_throwaway 4y agoIn other news - the sky is blue and the earth is turning on its axis
- gniv 4y agoI think this is the original report that the article is based on: https://www.apartmentlist.com/research/national-rent-data https://www.apartmentlist.com/research/national-rent-data The WSJ article seems to have concentrated on this bit from the report: "But even as rent growth has tracked that typical seasonal pattern, the winter dip this year went well beyond what we normally see. The 3.4 percent decline in rents from last August through January was the sharpest dip in the national median rent over any five-month period in the history of our estimates (starting in 2017)."
- StanislavPetrov 4y ago>Apartment rents fell in every major metropolitan area in the U.S. over the past six months through January For an article that doesn't mention New York, the largest major metropolitan area in the US, a single time, this assertion rings very hollow. I can assure you that rents have not fallen in the New York metropolitan area - quite the contrary. Nor has then been a "crush" of new supply here in New York - or virtually any new supply at all, unless you consider a few ultra-luxury skyscrapers where you can get a place for the low price of $20 million dollars.
- throwaway742 4y agoSomeone should tell my landlord.
- johngladtj 4y agoBut I keep being told that supply and demand doesn't apply to housing because of "reasons"
- rr888 4y agoJersey City here. We're building 10,000 new apartments a year but everything is full and rents are up again this year, its probably 20-30% higher than pre-covid. The new construction has just attracted new crowds, it hasn't helped.
- __derek__ 4y agoWouldn't that suggest that the development is lagging existing demand? Jersey City seems like a prime spot for spillover demand from Manhattan, so I'd probably expect that cycle to continue until it reaches parity with similar neighborhoods.
- sfe22 4y agoIf that is the case the new crowds old location dents are getting lower.
- dangwhy 4y agoDidn't happen with real estate. Big city real estate values went up too despite all the talk of wfh migration from cities.
- phendrenad2 4y agoIf you look at the actual numbers, a tiny, tiny number of people moved out of the cities during wfh. It's been massively overblown by the news because that's what the news does, blow any tiny story out of proportion for ad revenue. "Man bites dog" etc.
- ihm 4y agoNope, could be a lot of people are just leaving or apartments are being kept vacant at high asking rents.
- bell-cot 4y ago> The new construction has just attracted new crowds, it hasn't helped. Quip: If it was actually the new construction that attracted the new crowds, then there would be a whole lot more apartments out in rural cornfields.
- ehcjrvakzjtbe 4y ago[dead]
- 1-6 4y agoMy landlord is raising rents but this apartment has always been below market. I think apartments that have been attaching a luxury price tag no longer can justify that cost.
- moneywoes 4y agoSeems very market dependent, opposite here in Vancouver