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America's construction boom has led to lower rents and other benefits for tenants.
Record construction activity since the pandemic has increased the supply of vacant units, meaning more inventory is available to tenants. More multifamily units were completed in June than in any month in nearly 50 years, according to Zillow Group, an online marketplace for real estate.
Landlords have taken notice and are now adding rental offers — discounts, incentives or benefits to attract new tenants — such as free weeks of rent or free parking.
Zillow data shows that about one-third (33.2%) of landlords in the United States offered at least one rental discount in July, up from 25.4% last year. established.
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Meanwhile, the median rent for all bedrooms fell in July for the first time since 2020. according to Go to Redfin, a real estate brokerage website.
Median rent for a studio or one-bedroom apartment fell 0.1% to $1,498 per month; two-bedroom apartments fell 0.3% to $1,730; and units with three or more bedrooms fell 2% to $1,730, according to Redfin. $2,010.
Chen Wei, head of Redfin’s economic team, said rents remain high due to rising home prices during the epidemic. But now, rent growth has flattened, which is “good news for renters,” she said.
Sunbelt states are leading the way
Florida and Texas, two Sun Belt states that have seen a surge in rents in metro areas, have seen a surge in new apartment construction since the pandemic began Redfin says prices will drop as more units become available.
For example, the median rent in Austin, Texas, dropped to $1,458 in July, down 16.9% from the same period last year. according to to Redfern. The company noted that this was the largest decline of any other metro area analyzed in the national report.
Median rent in Jacksonville, Florida, fell 14.3% to $1,465 during the same period, according to Redfin.
For comparison to the statewide level, the median rent in Texas is $1,950, according to To Zillo. Median market rent in Florida is $2,500 established.
According to Zillow, 45 of the 50 largest U.S. metro areas have improved rental concessions from a year ago.
The highest annual increase in the share of rental listings with concessions was in Jacksonville, Florida, where concessions increased by 17 percentage points, followed by Charlotte, North Carolina (up 15.7 percentage points), Raleigh, North Carolina (up 15.7 percentage points), and Raleigh, North Carolina (up 15.7 percentage points). 14.7 percentage points), Atlanta (up 14.5 percentage points); and Austin, Texas (up 14.1 percentage points), according to Zillow data.
How Salary Growth Can Lower Rent Costs
Orphe Divounguy, senior economist on Zillow's economic research team, said that historically, wage growth and rent growth have been closely correlated.
He explained that the tightness of the labor market can predict the tightness of the real estate market.
The labor market is shrinking as the number of candidates exceeds the number of available jobs. Nonfarm employment increased by only 114,000 in July, down from 179,000 in June. according to Go to the Bureau of Labor Statistics. The unemployment rate jumped to 4.3%, the highest level since October 2021.
“When wages rise rapidly, that helps support housing demand,” Diwanji said. “As the labor market eases, we expect the rental market to continue to ease.”
Zhao said wages are growing 4% to 5% a year, “which is good. It means rents are actually going down relative to wages. Your wages are growing faster than rents.”
To be sure, wage growth has slowed. In the 12-month period to June 2024, wages and salaries increased by 5.1% in June, compared with 4.7% in the same period last year. according to Go to the Bureau of Labor Statistics.
Salary growth peaked at 9.3% in January 2022, but fell to 3.1% by mid-June, returning to pre-epidemic salary levels. according to Go to Indeed Recruitment Lab Institute.
