TUSCALOOSA, Ala. — According to new data from the Waller, Weeks and Johnson rental index, rent increases slowed for the third consecutive month across the United States. In September, average rent increased by 3.21% year-over-year but is 3.69% below the average from the beginning of the year.
“The U.S. numbers show a very steep decline since January, but that decline is starting to slow, meaning that the growth is starting to slow,” 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. “It’s slowing over the last several months more than it had over the first five months of the year.”
While major metropolitan areas such as Los Angeles (2.11%), Dallas (0.39%), Houston (2.73%), Miami (2.74%) and Atlanta (0.50%) had yearly rent increases below the national average, 10 of the 14 cities in the SEC were above the national average. Athens, Georgia, Columbia, Missouri, and Lexington, Kentucky were more than double the national average as rents grew more than 7% in all three cities.
With rents staying above the national average, residents in SEC cities would need to make $63,130 in order to avoid being rent-burdened. Consumers are rent-burdened when they spend 30% or more of their incomes on rent, lessening the ability to pay for other necessities.
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, 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.
Despite the rise, the average monthly rent in the SEC cities in June is $1,578, well below the national average of $2,047. No city hosting an SEC institution has an average monthly rent costlier than the national average.
“Rents are much more affordable now than they were at the beginning of the year,” Waller said. “At the same time, the story continues to be that mortgages are at 25-year highs right now. The interest rate is over 8% and that is going to create an issue in the housing market.”
Complete interactive data for both the U.S. and Alabama can be found on the ACRE Website.
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