The Calculated Risk Newsletter’s Bill McBride compiled recent data from Apartment List, Core Logic, and Zillow to track the increase in rents in 2022. So far this year, rents are increasing more slowly than they did in 2021, but faster than they did before the pandemic hit. Apartment List data shows an increase of 6.7% for rents in the first half of 2022, while the increase in the same time period in 2021 was 12%. The market has remained fairly steady on the supply side, which is likely due to higher mortgage rates, which have priced out potential first-time homebuyers, keeping them in rental units for longer.
Clearly rents are still increasing, and we should expect this to continue to spill over into measures of inflation in 2022. The Owners’ Equivalent Rent (OER) was up 5.5% YoY in June, from 5.1% YoY in May - and will likely increase further in the coming months.
My suspicion is rent increases will slow over the coming months as the pace of household formation slows, and more supply comes on the market.
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