MNI REALITY CHECK: US 1BR Rents Rise In Dec; Respite in 2018

--ABODO Data Shows Median Rent 1-BR $1,040/Month - New 2017 High

By Vicki Schmelzer

     NEW YORK (MNI) - The national median rent for a one-bedroom apartment in

the U.S. hit a new 2017 high in December, but should "come back to traditional

norms" in 2018 as "more supply hits the market," said Sam Radbil, communication

manager at apartment listing site ABODO, in an exclusive MNI interview as part

of the REALITY CHECK series. 

     "2016 and 2017 brought an overall increase in rent prices, driven by new

development and luxury apartments," Radbil told MNI.

     ABODO's National Apartment Report, released earlier this month, found that

the median rent for a one-bedroom apartment rose by $8.00 to $1,040 in December.

This was a new high for 2017. 

     The rise in rental cost represents a 2.4% increase over January's median

rent of $1,016. Rents have remained above $1,000 all year. For their

calculation, ABODO uses over one million ABODO listings across the United

States. https://goo.gl/3Uo9vF

     "As more supply hits the market in early 2018, rents should begin to come

back to traditional norms," Radbil said. 

     Just as luxury apartments led on the upside in terms of rising rents, they

should do so also on the downside, he explained. 

     "Typically, luxury market prices will come down first, then followed by

other mid-level apartment units," Radbil said. 

     "Although prices increased in 2017, we think that 2018 will bring much more

relief for renters across the country," he told MNI.

     --FACTORS DRIVING RENTS HIGHER SHIFTING

     While "supply and demand is always going to be the driver of rent prices,"

other factors, from faster job growth in the region to changing demographics,

have been at play in the past year also, Radbil said. 

     "In rapidly growing cities like Austin, Denver and San Francisco, the

consistent influx of new residents is creating more and more demand for all

types of apartments; As residents pile in at record numbers, supply simply can't

keep up with the demand," he said. 

     At the same time, the latest ABODO survey noted that eight of the top 10

cities in the U.S. saw slight decreases in December over November. 

     "The rent decreases during the winter months in 2017 have been caused by

those two issues: seasonality and supply increase," Radbil said. 

     "New apartments are coming online during the slower season for rentals,

thus, prices are falling as landlords are losing the leverage they typically

have in the summer months when supply is limited," he said.

     Demographics of current renters show that Millennials are renting at an

all-time high, Radbil said. 

     "Many Millennials are fearful of purchasing a home -- it either does not

fit their lifestyle or they cannot afford it," he said. 

     An ABODO report, released over the summer, showed that nearly half (49%) of

renting Baby Boomers (aged 51-69) faced a cost-burden, compared with 44.1% of

renting Gen-Xers (aged 35-50) and 46.5% of renting Millennials. 

     Editor's Note: Reality Check series reports on sentiment among business

people. They are intended to complement and anticipate economic data. 

--MNI New York Bureau; tel: +1 212-669-6438; email: vicki.schmelzer@marketnews.com

[TOPICS: MAURC$,M$U$$$,MX$$$$]