Real estate investors and developers have been concerned in recent months about the direction of rents. Rents on multifamily apartments as well as rental homes and townhomes peaked after the massive and clearly-unsustainable rates of increase of the prior two or three years, underwent a short correction, and now appear to be rising again. This raises the question of whether the correction has already played itself out, or whether a second dip lies ahead. Either way, it is fascinating to see the upswing, which is occurring ahead of the normally strong summer season (February, March, and April all showed increases).
The ZORI (”Zillow Observed Rent Index”), graphed above, is a valuable measure of residential rents that leverages extensive rental data from multiple sources, providing insights into median rent values across various geographic areas. Its methodology factors out the effects of seasonality and property age, quality, and composition (by measuring the rent at a particular property at two periods of time), ensuring a more accurate representation of rent changes. The data through April are shown here, and our channel checks indicate that the upswing continued in May.
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