After a COVID-induced roller coaster ride, the dust is starting to settle on the U.S. housing market. Overall, the pandemic has been a disaster for housing affordability, although there is hope for some relief in the new year.
Rents rise nationwide through November 4.7% Based on data collected by Apartment List, year-to-date. In a blog post, the company noted that rents have been falling for the past few months and that year-over-year rent growth may be below 4%.
That’s closer to the typical amount of rental growth we’ve seen in the years leading up to the pandemic.it’s much lower than 17.6% increase Last year’s rent in the country.
Still, the average rent for an apartment today is $1,356, about 20% higher than it was in February 2020, according to Apartment List data.
So while rent growth may be slowing, the country as a whole remains a more expensive place to live. Rising rents across the country mask some of the real housing cost pressures that COVID is causing in once-affordable parts of the country.
The lockdown, social distancing and remote work revolution of 2020 has seen people ditch traditionally expensive metropolitan city centers for traditionally more affordable suburban living in smaller cities and Sunbelt metropolises.
The net effect of expensive areas becoming cheaper and cheap areas becoming more expensive is price convergence across the country. Apartment List noted that rents in San Francisco used to be 2.5 times higher than in Phoenix before the pandemic. Now they are only 1.6x.
The picture is even more dramatic for housing prices, which are up about 40% nationwide from pre-pandemic levels, according to to the Case-Shiller house price index. Here, the areas with the biggest price increases are also traditionally more affordable in the South and Southwest.
National Association of Realtors notes Of the 10 housing markets with the fastest year-over-year home price growth, seven are in Florida. The other three are in Tennessee, North Carolina and South Carolina.
Housing affordability, as measured by the mortgage payment-to-income ratio, is reported to be at its lowest point since the 1980s amid rising interest rates this Washington post earlier This year.
Overall, it’s a rather bleak picture. But there is some good news.
have nearly 1 million Condominiums under construction today. That’s more than at any point in the past 40 years. The extra supply is expected to keep rents flat in the coming year.
The outlook for single-family homes is not rosy. Data released by the Census Bureau last week showed that both new housing permits and housing starts continued to decline.
But new home completions have held steady, and real estate experts expect home prices to remain largely flat next year.
That means housing probably won’t get more expensive next year. It would be a welcome break from the punitive measures against rising rents and home prices during the pandemic.