TUSCALOOSA, Ala. — According to recent findings in the Waller, Weeks and Johnson Rental Index, after more than a year of rapid price hikes, rent increases are starting to slow across the country.
In July, seven of the top 20 markets by population — New York, Los Angeles, Washington DC, Miami, Boston, San Francisco, Riverside, California, Seattle, San Diego, Tampa and Denver — recorded average rent prices above the national average of $2,062. Birmingham, Alabama, which ranks No. 51 in the top 100 markets studied, was about $600 cheaper than the national average for rent but saw rents rise .78% compared to last month, higher than the larger metropolitan areas such as New York, Chicago and Los Angeles.
Dr. Bennie Waller, the William Cary Hulsey Faculty Fellow in the UA Culverhouse College of Business and a research associate in the Alabama Center for Real Estate, said while the increase is higher than some of the major cities across the country, year-over-year rent prices in the Yellowhammer state remains consistent compared to the national outlook.
“I think the story is that rents are decreasing across the board. However, they’re decreasing at a lesser rate in Alabama than they are across the country and I think that shows here,” Waller said. “Starting in June, the year-over-year change started going down in the United States and it’s going down quicker relative to what Birmingham is. Birmingham is continuing to go down, but it’s not going down as fast as the U.S. and Huntsville has gone down but has started to go back up.”
According to Waller, the rental market in Alabama hasn’t seen as much of a correction because it didn’t over-develop like other states after the COVID-19 pandemic. As a result, the state has seen more consistent rent increases and because the southeast has continued to be a cheaper place to develop and live, the rate of growth is above the national average.
“The rents have gone up but they have gone up at a much slower rate over time,” Waller said. “Even though they went up at a much smaller rate, they haven’t fallen at the same rate as the U.S. has. We still have very affordable rents in Alabama, we still have good growth in terms of jobs, unemployment, low unemployment and job growth.”
Waller and fellow researchers Dr. Ken H. Johnson, an economist in Florida Atlantic University’s College of Business, and Dr. Shelton Weeks, the Lucas Professor of Real Estate at Florida Gulf Coast University, recently added the rent-burdened metric to their monthly analysis of the most overvalued U.S. rental markets. They use leasing data from Zillow’s Observed Rental Index to determine existing rents and statistically model historical trends from 2014. Income information is taken from the Wisevoter project.
Complete interactive data for both the U.S. and Alabama can be found on the ACRE website.