Colorful Cafe Bar in the iconic Beale Street music and entertainment district of Downtown Memphis, Tennessee.
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Despite broad increases in rental prices, competition in some US markets is waning as inventory rises, according to a new report From national real estate brokerage HouseCanary.
At the end of 2022, the median US rent is $2,305, up nearly 5% from a year ago. But when compared to the end of the first half of 2022, that average rent had declined by about 6%, the report shows.
While rent prices have cooled in some markets, metro areas along the East Coast and the industrial Midwest continue to rise in others through the housecannery.
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5 markets with the largest annual rent growth
These US metropolitan real estate markets had the largest year-over-year increases in median monthly single-family rental listing prices from the second half of 2021 to the second half of 2022.
1. Indianapolis; Carmel, Indiana; Anderson, Indiana
Median rent in late 2021: $1,300
Median rent in late 2022: $1,700
Rent Growth: 30.8%
2. Charleston, South Carolina; North Charleston, South Carolina
Average rent in late 2021: $2,195
Median rent in late 2022: $2,750
Rent Growth: 25.3%
New Haven, Connecticut
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3. New Haven, Connecticut; Milford, Connecticut
Average rent in late 2021: $2,250
Median rent in late 2022: $2,800
Rent Growth: 24.4%
4. Naples, Florida; Marco Island, Florida
Median rent in late 2021: $5,200
Median rent in late 2022: $6,448
Rent Increase: 24.0%
5. Pittsburgh
Average rent in late 2021: $1,520
Median rent in late 2022: $1,872
Rent Growth: 23.2%
5 metro areas with the biggest annual rent declines
These US metropolitan real estate markets had the largest year-over-year decreases in median monthly single-family rental listing prices from the second half of 2021 to the second half of 2022.
1. Memphis, Tennessee
Median rent in late 2021: $1,800
Median rent in late 2022: $1,695
Rent reduction: -5.8%
2. Port St. Lucie, Florida
Median rent in late 2021: $2,800
Median rent in late 2022: $2,650
Rent reduction: -5.4%
Cape Coral, Florida
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3. Cape Coral, Florida; Fort Myers, Florida
Median rent in late 2021: $4,000
Median rent in late 2022: $3,795
Rent reduction: -5.1%
4. Palm Bay, Florida; Melbourne, Florida; Titusville, Florida
Median rent in late 2021: $2,300
Median rent in late 2022: $2,200
Rent reduction: -4.3%
5. Phoenix; Mesa, Arizona; Chandler, Arizona
Average rent in late 2021: $2,350
Median rent in late 2022: $2,300
Rent reduction: -2.1%
‘It’s a very dramatic change’ says housing expert
As rent prices decrease and mortgage rates increase, it becomes cheaper to rent than to buy in many markets.
Renting a three-bedroom home is more affordable than owning a comparable median-priced property in most parts of the country, according to a study. recent report From real estate data analysis firm Atom.
Similarly, Realtor.com’s December rental report The U.S. median rental price published Thursday, $1,712, was about $800 cheaper than the monthly cost for an initial home.
“It’s a pretty dramatic change,” said Rick Sharga, executive vice president of market intelligence at Atom, pointing to a year ago when Atom analyzed that it was cheaper to buy than to rent in 60% of markets. “You simply can’t overstate the impact that higher financing costs have had on homeownership.”
while mortgage interest rates recently coldRates to more than double in 2022, which has never happened in one year Freddie Mac, In January 2022, the average 30-year fixed-rate mortgage was around 3% before jumping to more than 7% in October and November.
Sharga said the rate hike pushed the monthly mortgage payment up to 45% to 50% to buy a home, even home price appreciation slows down, “That’s probably the biggest factor in making that change,” he said.
The decision to rent or buy is ‘always a matter of time’
While conditions may turn somewhat more favorable for homebuyers in 2023, it is difficult to predict whether economy heading into recessionThat could change financial priorities, experts say.
“One thing to always keep in mind is that the markets are constantly changing,” said Keith Gumbinger, vice president of the mortgage website. msm, “If you don’t need to be in this market right now, it’s probably better to hold off and watch conditions change.”
Of course, there is more to home buying decisions than home prices and mortgage interest rates. “The decision to rent or buy is always a matter of timing,” he said. “And more importantly, it’s a matter of need.”