The start of a new year means we have an opportunity to look back at 2018 as a whole. ABODO recently came out with its annual report. The overall data is good news for renters, but not so great for property owners. Of course all real estate is local, so many cities did better than others. Here’s the Ali Safavi Real Estate analysis of the 2018 rental market.
In January 2018 the national medium rent was $1,050 for a 1-bedroom. By summer this dipped to 1,000. This could be caused by a variety of factors including natural disasters, political turmoil or a variety of local issues. Whatever the cause, by the end of the year rent had ticked up to $1,025. Los Angeles made it on the increase list, with a monthly average of 2.96%. Surprisingly we were only the 5thhighest, beaten out by Las Vegas, Dayton, Scottsdale and Milwaukee. Those cities are all on the rise in popularity while LA is dealing with a severe housing shortage. Even though those cities outpaced Los Angeles in growth, we still top almost every city in the country with rent prices.
If you are looking for the most affordable place to live, South Dakota, Arkansas and New Mexico are all sporting rents around $500 per month. It’s great affordability, but not an ideal number for real estate investors.
In the end we’re still only talking about a few percentage points of change, which in this business is considered relatively flat. With interest rates rising home sales could see a slowdown. This could mean more people will hold off on buying a home and instead look to rent. Higher demand leads to higher rent.
Two bedroom apartments were a different story. Nashville, for example, saw a 11% increase making the average $1,904. Los Angeles doesn’t need a large increase with two bedrooms already averaging $2,782 per month for about 998 sq. ft. Santa Monica is even higher with rents averaging $3,987. Surprisingly that’s even higher than famous Bel Air, which is under $3,000.
Why does this matter to you? Well, if you are planning to move to Los Angeles these are numbers that will factor into what area of town to look in. If you are an investor and have a national strategy, these numbers can be very interesting. At Ali Safavi Real Estate we frequently talk about emerging cities. If rent is rising 11% in a certain city, it might be worth investigating why and if that’s a trend that will continue. We’re all looking for a good deal and typically they don’t just fall into your lap. Be driven by the data.