There are sharp differences in the rate of increase in rents across the country. While rents have generally been reasonably constrained in most cities in the South and Midwest, they had been rising rapidly on both coasts. However, this pattern seems to be changing in the last couple of years. The rate of increase in rent has slowed sharply in East coast cities like Boston, New York, and Washington. In Washington, the owners’ equivalent rent index has risen by just 1.5 percent over the last year.
By contrast, West coast cities like Seattle, San Francisco, and Los Angeles continue to see rapidly rising rents. In Seattle, the owners’ equivalent rent index increased by 6.7 percent over the last year. If rents continue to outpace inflation substantially, it looks like the trend will be driven by an increasingly narrow number of metropolitan areas. This is seen clearly in the regional indexes which show a 3.1 percent year-over-year increase for western cities, compared to just 1.6 percent for the northeast.
For more, check out the latest Prices Byte.