Rents Still Skyrocketing

Rents Still Skyrocketing

Zillow recently revealed that the 43 million renter households in the US spent $535 billion on rent in 2015. Aggregate numbers like these often make it difficult to truly assess a situation. For more clarity, we want to share some points that were made in a Wall Street Journal article earlier this month.

The article made two important points:

1. Rents are increasing faster than the last several years:

 “Apartment rents increased faster last year than at any time since 2007.”

2. Rent increases are accelerating

“Another report from Axiometrics Inc., a Dallas-based apartment research company, showed that rents increased 4.7% in the fourth quarter compared with the same quarter a year earlier, the strongest year-end performance since 2005”.

Here is a graph to illustrate the rate of increase over the last several years:

Last year, the Twin Cities housing market had the most closed sales since 2005.

REALTOR Associations said sales were up 13.7 percent from 2014 to 2015, and the median home sales price also increased 7 percent to $220,000.  The report says the average home in the Twin Cities metro only spent 76 days on the market, which is a 10-year low.  Single-family homes and townhouse-condo segments sold at 96.6 percent of the original listing, and new construction topped out at 99.6 percent of the original listing. The numbers mean that sellers are accepting near-full price offers on their listings. 

As for 2016, realtors say low interest rates, rising rents, wage increases and the low unemployment rate will continue to be positive factors for the Twin Cities market.

A bit more local commentary…

A pattern is emerging that shows a fresh willingness by sellers to put homes on the market and buyers to enter the market. New listings are on the rise, if not in year over-year comparison, then certainly in week-over-week views, as we bounce well past the new year. Inventory is seemingly unfazed by the new 2016 calendar on the wall, as the trend line has remained roughly the same for the first weeks in January as the last weeks in December. If sales activity builds on what's happening now and reaches a slow boil, it would be surprising if more inventory mix wasn't added to the water soon.

In the Twin Cities region, for the week ending January 16:

* New Listings decreased 8.8% to 978
* Pending Sales increased 3.5% to 672
* Inventory decreased 20.3% to 10,392