NEW YORK–Regardless of how litigation plays out over the federal government’s prohibitions on evictions, credit unions should prepare for members to feel even more financially squeezed, as rents are soaring across many U.S. cities, a new report notes. But one analyst says the pandemic has skewed some of the numbers a bit.
The median monthly charge on a vacant rental jumped by $185 in March from a year earlier, according to U.S. Census Bureau data cited by Bloomberg. A national index compiled by Apartmentlist.com shows rents rose 1.9% in April alone, the most in data going back to 2017, Bloomberg added.
“The rising costs will pile pressure on poorer families who are more likely to rent – and less likely to be earning money right now, in a recovery that’s seen better-paid jobs bounce back faster,” the report observed. “For low-income Americans, shelter accounts for 40% of spending.”
Adding even more pressure, as CUToday.info reports separately, is a ruling by a federal judge this week that the Centers for Disease Control and Prevention had exceeded its authority by ordering a nationwide moratorium on tenant evictions last year.
Approximately 24% of renters, roughly eight-million people, missed at least one housing payment since March 2020, according to Mortgage Bankers Association data cited by Bloomberg.
Figures Exaggerated?
But the numbers may be skewed a bit, according to one person. As Bloomberg noted, the early months of the pandemic saw a headline-grabbing decline in prices for some expensive urban markets, like Manhattan and San Francisco, as higher-income workers were able to move out of city-center apartments to work remotely from somewhere else.
One result of that result was a lot of unoccupied high-end properties in such places, and that may have exaggerated the jump in median costs for vacant rentals as measured by the Census Bureau, creating what’s called a “compositional effect” that skews the data, Chris Salvati, a housing economist at Apartmentlist.com, told Bloomberg.
The declines in some regions offset gains elsewhere and kept national measures fairly steady last year, Salvati was quoted as saying.. But he now sees prices rising in all the places where they fell last year -– and pretty much everywhere else too.
‘Surprised’ at Rebound
“I’ve been surprised at how quickly things have rebounded over these past couple of months,” he told Bloomberg, which noted the latest monthly survey by Fannie Mae suggests Americans expect the median increase in rent to be 5.3% this year, close to the highest in the past decade.
Areas where rents have risen more than 10% year-on-year include Boise City, Idaho, and Riverside, California, according to Zillow data.
Meanwhile, Manhattan leases surged an annual 89% in March, the fastest pace on record, according to Miller Samuel Real Estate Appraisers & Consultants. It found that the net effective median rent has risen for four straight months – at “the highest rate in a decade,” Bloomberg added.