Mortgage rates have reached a 22-year high and are expected to continue rising, which will further challenge affordability and slow home sales. Additionally, the high rates are increasing the number of all-cash buyers in the housing market. On the other hand, rents have decreased for a third consecutive month, providing some relief for renters.
Home prices in the US have continued to rise for the fifth consecutive month, reaching near all-time highs, although high mortgage rates could impact further price gains for the rest of the year. Cities in the Midwest and New England saw the most notable price acceleration, while cities in the West experienced year-over-year price drops. Low inventory remains a challenge, with few homeowners wanting to sell, leading to higher prices and increased competition for available homes. In contrast, the rental market is offering more affordability as rental inventory increases.
The overall median asking rent for a one-bedroom apartment in Boston jumped 5.36% from July to August, making it the third-most expensive rental market in the country, according to a report by ApartmentAdvisor.
Manhattan renters may have reached their affordability threshold as median rents remain at a record high, leading to a decline in new leases and longer periods on the market, while landlords are hesitant to increase rents further; however, prices are unlikely to decrease significantly due to falling inventory levels and high demand.
The inability of landlords to secure financing, coupled with low employee attendance rates and increasing office loan defaults, poses a significant threat to the American economy and the overall stability of the system.
Rent prices in the Bay Area, including San Francisco and Oakland, are declining for the seventh straight month, with a year-over-year drop of 4.3%, providing some relief for renters; however, low-income tenants still face significant affordability challenges.
Landlords are offering incentives to attract renters in the US housing market, even though the median asking rent is at a near-record high, with some landlords providing one-time discounts or a few months free to renters, which effectively lowers rents in certain areas, although this may not be reflected in asking-rent data. The rental vacancy rate has increased, leading to more vacancies for landlords to fill, and landlords are raising rents for existing tenants but not new tenants, in order to maintain high asking rents while strengthening returns. Demand for higher-end properties is declining, while more affordable units are in demand. The rental market varies across regions, with the West and South experiencing decreases in median asking rent, while the Midwest and Northeast have seen increases.
Rents in Los Angeles and surrounding areas are stabilizing after a peak in 2022, with a 1.65% increase year over year, due to decreased demand and a weaker housing market.
Renters in big cities, such as New York, London, and Sydney, are facing increasing housing costs as a result of high inflation, rising interest rates, and a lack of affordable accommodation.
London's office market is facing a "rental recession" with a 30-year high in empty workspace, as tenants opt for greener suburban buildings and hybrid working post-pandemic, causing shares of top landlords to decline.
