Rental price explosion in the USA: a thousand more for the apartment
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After the corona pandemic subsided, housing costs in the major cities of the USA have exploded. In view of the scarcity, there is already a bidding competition for the remainder in New York. But more and more members of the middle class can no longer afford their apartments.
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Washington.The one-bedroom studio in an apartment building in the trendy Williamsburg neighborhood of Brooklyn looks friendly but small. The bathroom is on the left behind the entrance door, the kitchen on the right with an open counter to the combined living room and bedroom behind it. The accommodation measures 48 square meters. A mere $3,520 monthly rent is due for the mini-apartment. When it was last rented a year ago, the price was $2,700, according to real estate portal Zillow.
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It shouldn’t be long before the apartment is rented. Its location is attractive, the market is practically deserted, and the premium of 30 percent is almost modest by New York standards. Since the Americans have been returning to the cities once the corona pandemic has subsided, rents in the major cities have literally shot through the roof. According to a recent survey by the industry portal Zumper, the median price for new rentals for a two-room apartment in New York has risen by 37.9 percent within a year. The increase in Miami was even higher at 38.4 percent. On average across the US, the rent for such a home climbed to $1,410 in April – the 13th consecutive monthly record.
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The initial thesis of a normalization of the rental market after the collapse of the Corona years seems to be refuted. Prices are now often well above pre-pandemic levels. Zillow’s Williamsburg apartment was valued at $2,900 in April 2019. A year later, the price dropped to $2450. Now it is more than 600 dollars above the original value.
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Only 60 percent stay in their homes
For more and more people, even from the middle class, the astronomical rents are becoming unaffordable. “Anyone who wants to save moves out instead of paying the higher price,” writes the listed real estate company Equity Residential quite cynically in its current quarterly report. Many leases in the USA are limited and have to be renewed at new conditions after one year. Only 60 percent of Equity Residential clients in New York are now staying with the bar. But that’s not a problem, the company boasts: “We easily find new tenants on these terms.”
The rental market in the USA is not only fueled by the return of many employees to the cities. The cause is also the explosion in real estate prices: due to a lack of staff, delivery problems and inflation, building a house has become extremely expensive. An American central banker recently felt first-hand how dramatic the situation on the housing market is. With an annual income of $203,000, Fed Governor Christopher Waller is not one of the country’s poor. Nevertheless, he has problems: “I’m trying to buy a house in Washington,” he complained a few weeks ago, “but the market is crazy.” The result: many members of the middle class can no longer afford their own home. They stay in their rented apartment, which further reduces the supply.
Apartments are now being auctioned off
Accordingly, the rents for somewhat larger apartments are also climbing at a rapid pace. A three-room apartment now costs 3,550 dollars on average in New York. That’s 36 percent more than a year ago and a whopping 5 percent more than a month ago. In Miami, the numbers are virtually identical. In the traditionally unaffordable San Francisco, rents are rising more slowly – “only” by 14.3 percent year-on-year. $4,000 is due there.
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Despite such astronomical rents, living space is scarce. The vacancy rate in Manhattan is estimated at less than 2 percent. These are heavenly times for landlords. There are now regular bidding competitions for rental apartments.
Recently, realtor David Kazemi listed a two-bedroom apartment in Brooklyn for $3,450. “As soon as something is on the market, the phone rings and the game begins,” he told the New York Post tabloid: He was “downright overwhelmed” by inquiries and higher offers. He ended up renting the apartment for $3,800.
:watermark(assets.rndtech.de/rnd/watermark-plus.svg,50,50,0)/cloudfront-eu-central-1.images.arcpublishing.com/madsack/PWLDSHZZT5GTBHICPBOSHCREY4.jpg?fit=%2C&ssl=1 "Rental prices are skyrocketing from New York to San Francisco")
