TUSCALOOSA, Ala. — For the second consecutive month average rent is on the rise in Alabama according to new data from the Waller, Weeks and Johnson rental index. According to the index, the statewide average rent in April was $1,376, a 1% increase since March and a 5% increase year-over-year.
As a result, rents are 5% more expensive on average than the index’s predicted rent rate. The predicted rent rate uses Zillow’s Observed Rental Index data to determine existing rents and statistically model historical trends from 2014.
“Affording a home is becoming increasingly difficult, and as a result rental demand continues to increase driving up rents,” 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.
Waller and fellow researchers Dr. Ken H. Johnson, an economist in FAU’s College of Business, and Dr. Shelton Weeks, the Lucas Professor of Real Estate at Florida Gulf Coast, added the rent-burdened metric to their monthly analysis of the most overvalued U.S. rental markets.
According to The Department of Housing and Urban Development, residents are considered rent-burdened if they “pay more than 30% of their income for housing including utilities.”
In Alabama, residents will need to make an average of $55,055 to avoid being considered rent-burdened, a $1,000 increase from last month. Compared to the rest of the country, Alabamians save more than $24,000 as the affordability rate was $79,889 in April.
Major metropolitan areas across the United States such as Houston, Dallas, Miami and Atlanta recorded consecutive monthly rent increases of .5% or lower, however in cities such as New York, Boston and Chicago, rent increases averaged around 1%.
Federal Reserve Chair, Jerome Powell said rents were decreasing in April’s Consumer Price Index report. While he said he was confident in the decline during his press conference, he’s “not so confident in the timing of it.”
According to Waller, the longer the Fed opts to delay cutting rates, it may continue to drive up rent prices.
“Potential homebuyers are in a predicament, as higher interest rates mean higher monthly payments, forcing many to remain renters,” Waller said.
Complete interactive data for both the U.S. and Alabama can be found on the ACRE Website.
The University of Alabama, part of The University of Alabama System, is the state’s flagship university. UA shapes a better world through its teaching, research and service. With a global reputation for excellence, UA provides an inclusive, forward-thinking environment and nearly 200 degree programs on a beautiful, student-centered campus. A leader in cutting-edge research, UA advances discovery, creative inquiry and knowledge through more than 30 research centers. As the state’s largest higher education institution, UA drives economic growth in Alabama and beyond.
