Median U.S rental prices rose just 0.5% year-over-year in June after falling in May for the first time since the start of the COVID-19 pandemic. Over the past four years, rents have soared nearly 25%, but experts say they’re poised to fall modestly throughout 2023 amid the biggest apartment construction boom in decades. While some renters could find much-awaited relief in the form of decelerating rental costs, others will continue to put an increasing share of their income toward their monthly payment.
Much of the new construction kicking off in the rental sector is located in just a few metro areas, and many of those new units include luxury apartments that cost $2,000 or more per month, The Associated Press reports.
Developers are rushing to complete projects that were green-lit during the pandemic-era surge in demand for rentals or left in limbo by delays in supplies of fixtures and building materials. Nearly 1.1 million apartments are currently under construction, according to the commercial real estate tracker CoStar, a pace not seen since the 1970s.
Increasing the supply of apartments tends to moderate rent increases over time and can give tenants more options on where to live. But more than 40% of the new rentals to be completed this year will be concentrated in about 10 high job growth metropolitan areas, including Austin, Nashville, Denver, Atlanta and New York, according to Marcus & Millichap. In many areas, the boost to overall inventory will be barely noticeable.
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