When you think about buying a property, things like cash flow, appreciation, and tax benefits all weigh into your decision … But in order to really understand the investment you’re making, those aren’t the only factors to consider.
Thanks to higher interest rates, turmoil at regional banks, and slowing rent growth, sales of apartment buildings are falling at their fastest rate since the subprime-mortgage crisis, the Wall Street Journal reports.
Back in September, when looking at various leading rental market indicators, we reported that “Manhattan Apartment Rents Finally “Plateau” After Red-Hot Summer” a trend reversal that was also observed at the national level as we observed in “Nationwide Rents Drop For First Time In Two Years.”
Property management firm RealPage published new data that shows demand for US apartments began “evaporating” as early as last summer as the highest inflation in a generation crushed consumer confidence.
Less than a year after voters approved some of the strictest rent control measures in the country, the St. Paul, Minnesota, city council appears set to approve exemptions for new construction projects and other reforms opposed by activists.
Mortgage rates are up, so fewer people can afford to buy homes. That means additional demand for single-family rentals and apartments, right? Well, probably not. We’re increasingly skeptical of that prevailing view.
Peak apartment rent growth is almost certainly now in the rearview mirror, as nearly all measures of rent growth showed deceleration between June and July. But that’s not to say it’s bargain shopping time, as rent growth remains elevated – and likely will throughout the remainder of 2022.