Rents hikes showed no signs of slowing as we started 2022, according to the CoreLogic Single-Family Rent Index…(CoreLogic)
- Y-O-Y: Rents climbed 12.6% in January year-over-year, the fastest annual increase in over 16 years.
- M-O-M: Rents climbed 0.6% from the prior month, which matches the monthly gains last seen in November 2021.
Unfortunately, the biggest price jumps are no longer among the higher-priced properties. Middle-priced properties saw an average increase of 13.4% year-over-year, up from 3.4% in January 2021…
- Higher priced properties were up 12.2% year-over-year, up from 4.5% in January 2021.
- Lower-priced properties were up 12.0% year-over-year, up from 3.0% in January 2021.
Miami by far saw the biggest year-over-year appreciation with a 38.6% jump in January 2022 followed by Orlando (+19.9%) and Phoenix (+18.9%).
This continued increase in rents explains why calls for rent controls are getting louder, “proposals, which would generally allow landlords to boost monthly rents by no more than 2% to 10%, are on the legislative agenda in more than a dozen states.” (WSJ)
A lot of people outside of the housing sector keep wondering why the demand for housing remains elevated with double-digit price appreciation and rising rates. Rent costs have been and will continue to be the answer. Miami is an extreme example, but if home prices are up 20% but rent is up 38.3%. It is still cheaper to buy even with higher rates. Homebuying’s biggest advantage is it allows borrowers to lock in their costs. Sure, taxes and insurance can change, but that’s a fraction of a percent. And when you are facing a possible 5-10% increase in your rent next year it makes a whole lot more sense to buy.
