Graphic: Where is rent increasing and decreasing the most?
As the Economy Rebounds, So Do Rent Prices
According to an Aug. 5 report from the U.S. Department of Labor, the U.S. economy added 255,000 jobs in the month of July. It’s the second straight month of strong employment growth, a stable unemployment number, and an increase in wages.
Such encouraging national figures come after a spring of weaker-than-expected growth and seem to point to an increasingly healthy U.S. economy, eight years removed from the financial crisis of 2008.
The largest sector for job growth in the month of July was in professional and business services, which added a total of 70,000 jobs. Of those, 37,000 were in professional and technical services, while 8,000 were in computer systems design and related areas.
That’s great news, obviously, for emerging tech centers like Minneapolis, Nashville, and Portland, all of which are becoming increasingly attractive alternatives to a crowded (and expensive) Silicon Valley. But it might not be all positive for renters: In the month of August, rents in those cities made sizable increases.
In Minneapolis, the average one-bedroom now costs $1,368 per month, up from $1,197 in July, for a 14% increase. Nashville rents rose 13% to $1,124 per month, while Portland ($1,370) and Atlanta ($1,451) showed increases of 12% and 11%, respectively.
According to the Department of Labor, other sectors of the economy that saw notable growth were leisure and hospitality (45,000 jobs added), health care (43,000), and government (38,000).
In San Antonio, where jobs in government, leisure and hospitality, and health services make up almost half of the city’s workforce (according to the U.S. Bureau of Labor Statistics), rents rebounded, increasing 8% to $857 per month. That’s a complete turnaround from July, when the Texas city was on ABODO’s list of greatest decreases, having gone down 9% from June.
Like San Antonio, Houston is one of the fastest-growing metropolitan areas in the United States. According to the U.S. Census, Houston added over 40,000 residents from mid-2014 to mid-2015. That population growth has been a boon to developers, who by the end of 2016 will have added 35,000 units over a two-year span.
But Houston’s economy, though diverse, is still dominated by the energy sector. And falling oil prices — crude oil is currently trading at $43 a barrel, less than half of what it was trading at a year and a half ago — have had ripple effects throughout the city, slowing economic growth. A downtick in jobs, coupled with what is now a surplus of housing, might explain a 14% decrease in average rent from July to August, falling from $1,521 per month to $1,306.
Two Ohio cities, Cleveland and Toledo, saw rent decreases between July and August. Cleveland’s average price for a one-bedroom fell 9% to $564 and Toledo saw a similar drop of 8% to $533. Over the past year, both cities showed the largest percentage increase in leisure and hospitality jobs. Over 11,000 of Cleveland’s 18,000 new jobs since June 2015 have come from the sector, a signal that the city’s urban revitalization projects might be paying off. With low housing prices and steady job growth, the city is an increasingly attractive destination for renters.