Martine de Bono’s Post

I expect this trend to continue for another 12 months, especially given supply side pressures in many major multifamily markets. Beyond that, this wage growth sets the table for rents to increase quickly as absorption catches supply in the lull of multifamily deliveries we will see in 2026 and 2027.

Carl Whitaker from Real Page highlights that rents are currently at their most affordable level since January 2021 from a rent/income perspective. While rents have stayed steady in our markets, income levels have generally gone up. This shift reflects a positive trend where renting is becoming more affordable relative to income. With stable rents and increasing incomes, housing costs are becoming a smaller proportion of people's earnings. This trend bodes well for both the industry and renters, signaling enhanced housing affordability.

📈 Rents are skyrocketing across the U.S., outpacing wage growth in most major cities. While NYC and Miami face steep rent hikes, Houston bucks the trend with wages outpacing rents. Curious about the details? Click the link to read more! 🔗 https://lnkd.in/eZVJNM5c #RentVsWages #RealEstateTrends #RealEstate

Rent burdened Gen Z'ers are an ominous sign for the economy. Rents are not going down (enough to make a difference), unless the economy collapses and unemployment goes up, due to supply contraints and a shrinking new construction pipeline. In fact, supply and demand considerations will likely force rents substantially higher, in the long term. Salaries are not going up enough to make a difference. So what gives? Eating out, cars, clothes, etc. Something has to give.

You’d have to make at least double what most Americans earn to rent a home in large cities such as San Francisco and New York, a recent analysis reveals. Based on average rent costs in the 15 most expensive metro areas, Moody’s Analytics determined the annual income needed to “comfortably” rent any type of home. The study defines “comfortable” as needing only 30% of your income to cover housing costs, as is commonly recommended by financial experts. The most expensive city to be a renter is New York City, with an average rent of $4,122, according to Moody’s data, which looks at all sizes of rental units. To afford that, a renter would need to earn $164,870 a year, nearly triple the $59,228 annual median salary that full-time workers make, according to the U.S. Bureau of Labor Statistics.

CoreLogic Australia with Eliza Owen just released the Best of the Best 2024 Report! Highlights: 📊Resilient but Slowing: The Australian housing market remained resilient throughout 2024, with home sales totaling 528,000 nationally, marking an 8.0% increase from the previous year and a 6.0% rise from the five-year average. However, the market experienced a slowdown as the year progressed due to waning demand, increased advertised supply, and altered outlooks on inflation and interest rates. 📊 Diverse Growth Conditions: The performance across different regions and market segments remained highly diverse. Annual value change ranged from a -2.3% decline in Melbourne to a remarkable 21.0% surge in Perth. This diversity highlights the need for localized market expertise when advising clients. 📊 Shifting Demand: Housing affordability constraints played a significant role in shaping demand. The lower quartile of national market values, representing more affordable properties, rose by 10.3%, surpassing the growth observed in mid-range and higher-priced properties. This suggests a concentration of demand in more affordable segments, possibly driven by first-home buyers or investors seeking value. Summary: The sources paint a picture of a dynamic housing market in 2024, characterized by overall resilience but a noticeable slowdown in the latter part of the year. The performance across capital cities and regions varied significantly, with Perth, Brisbane, and Adelaide showing strong growth, while Melbourne, Sydney, and Canberra experienced declines. Several factors contributed to these trends: 📊 Economic Factors: The report attributes the slowdown to various economic factors, including a decline in the household saving rate, rising inflation affecting non-discretionary spending, and the impact of the cash rate remaining at 4.35% throughout the year. 📊 Supply and Demand Dynamics: Increased advertised housing supply during the spring selling season, coupled with softer buyer demand, contributed to the shift in market dynamics. This is reflected in lower clearance rates and a slight increase in median selling times compared to the previous year. 📊 Affordability Constraints: The report highlights the increasing challenge of housing affordability, with the median dwelling value reaching 8 times the median household income. This affordability pressure likely played a role in driving demand towards lower-priced market segments.

Rent Growth Slows to Lowest Rate in Four Years Annual U.S. rent growth registered a 2% increase in October, continuing a slowing trend that began in early 2024 but is well below the average annual rent growth of 3.5% that occurred in the decade prior to the pandemic. High-end price growth (2.6%) slightly outstripped low-end gains, a sign that some renters are leveraging advantageous economic conditions to upgrade – including wages that are up buy 40% since last September. “Single-family annual rent growth slowed in September to the lowest rate in over four years, and monthly rent growth posted a second month of below-seasonal trend growth, making it clear that single-family rent growth is decelerating,” said CoreLogic principal economist Molly Boesel. “While about one-third of metros showed stronger rent growth than in the previous year, more metros showed decreases in rents than in the prior report. While a slowing in rents will be welcome news to renters, increases since 2020 are still at 32%. We will have to wait and see what happens during the next 4 years as we are going to see some changes in the nations housing policy that will shape the future. Fingers crossed, eyed crossed, legs and arms crossed! Have a great day!!

The salary you need to comfortably rent in the 15 most expensive places in the U.S. You'd have to make at least double what most Americans earn to rent a home in large cities such as San Francisco and New York, a new analysis reveals. Based on average rent costs in the 15 most expensive metro areas, Moody's Analytics determined the annual income needed to "comfortably" rent any type of home. The study defines "comfortable" as needing only 30% of your income to cover housing costs, as is commonly recommended by financial experts. The most expensive city to be a renter is New York City, with an average rent of $4,122, according to Moody's data, which looks at all sizes of rental units. To afford that, a renter would need to earn $164,870 a year, nearly triple the $59,228 annual median salary that full-time workers make, according to the U.S. Bureau of Labor Statistics. Rent prices have soared nearly 19% since the start of the Covid-19 pandemic in March 2020, according to Moody's. However, prices have cooled off recently amid a construction boom in rental units, with average prices largely the same as a year ago. With rising home and rent prices, spending only 30% of your income on housing has become increasingly unrealistic — especially in the biggest U.S. cities. However, some of the higher costs are offset by median incomes that tend to be $10,000 to $20,000 higher than the U.S. median in these cities. Here's a look at the most expensive areas in the U.S., as ranked by the income needed to comfortably afford a rental. 1. New York City Average rent: $4,122  Income needed to live comfortably: $164,870  2. San Francisco Average rent: $3,139 Income needed to live comfortably: $125,545  3. San Jose Average rent: $3,012 Income needed to live comfortably: $120,486  4. Westchester, New York Average rent: $2,945  Income needed to live comfortably: $117,804  5. Boston Average rent: $2,938  Income needed to live comfortably: $117,517  6. Oakland-East Bay, California Average rent: $2,659  Income needed to live comfortably: $106,377  7. Long Island, New York Average rent: $2,521  Income needed to live comfortably: $100,857  8. Northern New Jersey Average rent: $2,477  Income needed to live comfortably: $99,084  9. Orange County, California Average rent: $2,472 Income needed to live comfortably: $98,861  10. Fairfield County, Connecticut Average rent: $2,441  Income needed to live comfortably: $97,636  11. Santa Cruz-Watsonville, California Average rent: $2,393 Income needed to live comfortably: $95,704  12. Los Angeles Average rent: $2,376 Income needed to live comfortably: $95,038  13. San Diego Average rent: $2,355  Income needed to live comfortably: $94,201  14. Miami Average rent: $2,241  Income needed to live comfortably: $89,658  15. Seattle Average rent: $2,240 Income needed to live comfortably: $89,607 #rent #renters #housing

Why we need to invest in Real Estate in the U.S？ There are many angles to consider, but from a straightforward perspective, the growth in housing values has outpaced income growth. This trend, despite going through 2-3 times of economic crises, the overall housing prices has been upward in the U.S market. Others, like urbanization and limited land suppl, the low-interest rate environment, a stable asset is seen as a hedge against inflation and uneven income growth, etc, even the overall economy has grown,but where housing value growth has significantly outpaced income growth! Even though housing prices temporarily dropped or slowed down during economic crises, the long-term trend still remains upward. In past 30-40 years, the ordinary income growth has consistently lagged behind rising housing prices, this is not a recent trend.For at least the past two decades, the growth rate of median income has fallen behind the home prices. Data from the U.S. Census Bureau shows that from 2000 to 2022, the median annual household income in the U.S. increased about 77% from $42,000 to $74,500. However, during the same period, the median home price nearly rising by 185% from $140,000 to $400,000, not including tax advantages. On an inflation-adjusted basis, the household incomes have increased only 4% to 6% since 2000, while home prices have surged by 55% to 60%! So we need to care about where we put our assets, let’s saving and invest in real estate!#DataVisualization

Affordability is re-emerging as a tailwind for market-rate apartments. That's not the popular narrative today, but that's what the data is telling us -- with rent-to-income ratios (among actual lease-signers) nearing pre-COVID levels again. First: Rental affordability is a bifurcated issue. Two things can be true: 1) There's been ample demand for market-rate apartments at today's (and yesterday's) rent levels among qualified renter households, and 2) There's a severe shortage of affordable and attainable housing among those who cannot afford market-rate rentals -- the vast majority of whom could not afford it long prior to COVID, either. That's important nuance missing from today's debates around rental affordability. Back to this data: The typical household signing a new lease in July for a market-rate, professionally managed apartment is paying 21.8% of income toward rent. That's down from a peak of 23.8% in 2022, and continues a gradual downward trend since then. How? Simple: Wage growth has outpaced new lease rent growth (and by a wide margin) for 18+ months. Wage growth continues, even as rent growth has evaporated in most markets due to an apartment supply wave at 50-year highs. Supply is doing its thing. And even with wage growth moderating as inflation cools, that trend will almost certainly continue through 2024. I've missed on my share of predictions over the course of my career, but I'm feeling optimistic about this one I made going into 2024: Median rent-to-income ratios are on track to be back within the realm of pre-COVID norms (21%-22%) by the end of this year. (The July number suggests we're already there but we'll give it a few months to make sure it sticks.) So why do we continue to see headlines proclaiming that the opposite is true -- that rents are still growing faster than wages? Simple: Because most analyses are using apples-versus-oranges data. They're mix-matching datasets covering different sets of people and different renting situations. This analysis is different because it's narrowly focused on renters signing a new lease in a market-rate apartment, and it uses their reported income (from lease application) compared to the rent they're actually paying. (It's blind spot is renewals, but with a typical stay of 2-3 years, most are unlikely to see a meaningful upward shift in their ratio.) So here's the bottom line: Whenever you see crazy data, remember: The vast majority of property managers (from mom-and-pops to institutional) won't lease to someone spending >30% of income on rent. We've added 1.3mm market-rate apartment households, on net, over the last four years and they've come in with median rent-to-income ratios of 22-24%. That's well below the affordability ceilings widely believed to be 30-33%. But that doesn't mean everyone can afford a market-rate rental. Millions can't, which is why we need more affordable and attainable housing, too. Two things can be true. #rents #affordability #multifamily