Regional differences in rental market conditions

N P R. If you are a longtim renter, you've had a rough go of it for a while. The typical asking rent has gone up about thirty seven percent since before the pandemic, according to Zillow. Which is why it surprised us when we were talking with Zillow senior economist Kara Ing, and she said this. Yeah, so it's twenty twenty six and reters This is your year. It's a Rners's market right now. Now Rnters, before you grab your sharp knives and your leases and say that that can't possibly be true whether or not you live in a renter's market depends on where you live This is the Indicator from Planet Money. I'm Wayon Wong, and I'm here with MP's personersal finance reporter, Stehven Basaha. Thank you for having me back on the pod, Wayon. It is so fun to have you back, Steve, and we' missed you. I missed being here too. And on today's show, we get to hear two vastly different renters' experiences from Nashville to Chicago And learn what makes a difference between a renter's market and a renter's nightmare. You guessed it, location, location, location. Before we zoom in on specific cities, if we look at the US as a whole, it does look like a renter's market. Yeah, if you look at rent in May, it was up about two percent from a year earlier, according to Zillow. That's slower than the rate of inflation. And at the same time, wages grew faster than rent Win win. and realtor. com even shows rent falling nationally And the reason for that comes down to economics one hundred one, supply and demand. The US has recently gone through an apartment construction boom. In twenty twenty four, the US built more than six hundred thousand units. That's the most in decades. That huge increase in supply has outpaced demand, at least nationally. Zillo economist Kare Ing says apartments are sitting empty. There's a lot of apartment buildings hitting the market all at once and property managers are trying to fill it. and they're doing it with freebies Freebies, landlords aren't just lowering rent, they're offering deals. All the rentals listed on Zillow in April, almost half were offering some financial incentive to move in, a Zillow record. The incentive could be anything from a waived pet fee to a month or two of free rent. Free rent. Runters tend to like the free month rent and it doesn't hurt to. Because right now you guys have the power. What does all this renter power look like All sorts of apartments just text me, well, how about this or how about this? Mason Coomens was recently apartment shopping around Nashville and apartments were texting him with deals. so he used that renter power to negotiate Well, this place is doing two months free and you're only doing one month free. And they're like, Okaykay, well we might be doing two months free. I even saw some places doing three months, three and a half months free. I'm sorry, three and a half months. That's a whole financial quarter. A whole quarter off of your rent. So these perks, they are especially common in sunboat cities like Nashville, Phoenix and Austin where there's a lot of land to build on and fewer regulations to stop it. So more apartments getting built and more deals. Mason ended up going with a place that was offering two plus months of free rent. It's a brand new apartment complex complete with a pool, a gym and a market. There's a little kiosk like you would have in an airport and you go over, you scan your items and then you check out counting those free months off, the rent is eight hundred dollars a month. What do you say to someone who's like you're saying it's rent's market, but man, that sounds like a lot of money to me. I mean, it is a lot of money. It's not cheap at all, but when I'm looking at eight hundred dollars hundred for a one bedroom versus okay can drain all the money that I have for a down payment on a house and then still come out with a, you know, three thousand dollars mortgage that's significantly a lot more of my paycheck going to a housing payment Yeah, LendingTree found that US homeowners generally pay each month about thirty seven percent more than renters homeownership is one of the main ways Americans build wealth Rnters can use those savings to make investments and in some cases even be financially better off than homeowners Of course, if you really do want to be a homeowner, then those same supply and demand forces that are making rent more affordable could do the same for the housing market. Yep, Congress in fact just passed a housing bill with overwhelming bipartisan support One of the main ideas in it is to encourage more home building to boost supply and lower home prices in part by reducing regulation around construction. and offering financial carrots to local communities that build more So far, President Trump has refused to sign it. He's called it a yawn compared to his election security bill, the Save America Act. And he wants that passed first. But so long as he doesn't veto the housing bill, it should become law without his signature within the next week. Now, when it comes to renter power, there are limits For one, these financial perks are meant for new residents You often are not offered if you want to renew your lease. If every year I kind of want to get a couple months off free rent, then I would have to move to do that And he has moved over five years in Nashville. He has moved four times in large part to get those perks. That's too much moving for me. Well, that's the idea I'd like if Why offer these incentives when we know people don't want to move? How much pizza has he offered? free pizza? H he offered Fs to help him move? Probably covered by a few months of free rent. If you're listening to this and you're not in Nashville, you're probably a little miffed So when you hear someone from Zillow say Right now, it is a renter's market in the US. What is your first reaction to that Hell no. I sorry The voice of indignant renters everywhere is Chloe Trob. She rents a one bedroom apartment in Chicago with her boyfriend Carson McDonald for six hundred dollars a month. and that is a It's like a screams that's like a steel in Chicago. What neighborhood does Chloe live in? She said Lincoln Park. Okay, that is a steel. Good job, Chloe. Well, Chicago does have some of the fastest growing rent in the country, like five and a fivealf percent year over year. So this is a big caveat regarding the renter's market. It depends on where you live Places like Nashville went on apartment construction sprees offering all these renter freebies. Carson and Chloe visited Nashville recently and saw all that extra supply. All these big new constructions with these banners that say two months free rent we just dro through and saall that. lots of building. If you frequent Nashville or if you have over the past ten years, the skyline looks drastically different. But cities like Chicago, Los Angeles, and Philadelphia did not get that construction boom the Midwest and Northeast in general just saw way fewer new units compared to the south It depends on where, but that can be because of lack of land or regulation getting in the way. Only about twenty percent of Chicago rentals on Zillow are offering those financial move and perks There are just too many renters chasing not enough apartments. Supply and demand are reversed there. Take when Chloe was chucking out an apartment and told the guy showing the place that the rent was too much for her He goes It's okay, like I'll fill it. I have twelve showings after you Telve twelvereaking showings, this guy's like subleting it like he goes, it's a rat race out there. and I go, exactly what I've been saying like, you know. And even if you have gotten a good deal on an apartment in the past few years, rent is still way up from where it was before the pandemic We brought this point up with our Rnter's market economist, Kara Ing with Zillow. Yeah, no, that's very valid. You're exactly right. Rnts went up What thirty seven percent since before the pandemic Um I mean, that was a big shock. Remember what happened the pandemic is price as if everything went up? At least right now, the cost of rent has not gone up as fast as other expenses over this past year, like the cost of electricity, the cost to fill up your car. Kara says, yes, in March, rents were still rising, but wages were rising even faster. And that translated into an additional two thousand three hundred dollars a year in people's pockets. That's not counting those free months of rent some renters are getting. And again, that's an average. It all depends on where you live and if you got that raise. Now, I know what gas priceices right now. I don't know how far that will go. but It does mean that rent is the place giving you that breathing room As for renters who do not want to move and still want those incentives Kara says talkal with your landlord. Negotiation power is in your favor At least in some parts of the US. Yeah, notot what that guy Chloe was talking to, who was like, it's a rat race out there. It's like, good luck. Maybe odds be ever in your favor This was produced by Corey Bridges with Egineering by Travis Hagen. It was fact checked by Saram Wates. Kaking Cannon is our editor and the indicator is a production of NPR.