Tom York on Business: Falling rents are a silver lining amid a slowing economy
Well, the general slowdown in the economy is a bright spot for potential renters in an otherwise cloudy and gray sky.
Residential real estate website Zilov A recent data analysis found that typical rents in San Diego have fallen slightly month-over-month this fall.
Certainly, typical rent rose almost 13% year over year to $3,105 in October, which puts us third nationally year over year, Zillow noted.
There is a nationwide pattern of falling rents, with typical prices falling 0.1% month-on-month. This is the first monthly decline in 2 years.
Typical rent in the US was $2,040 in October, up 10% from 2021.
“According to our economists, the small drop is reminiscent of a more ‘normal’ rental market, consistent with October’s declines seen in each of the three pre-pandemic autumns,” a Zillow spokeswoman said.
According to the company, rents have fallen in all but nine of the top 50 U.S. metropolitan areas — including posh markets like Boston and Miami and more affordable Midwest metro areas like Cleveland and St. Louis.
California cities have the most expensive major markets, such as San Jose where typical monthly rent is $3,341, San Francisco $3,199, San Diego $3,105 and LA $2,979.
Miami and New York had the highest annual increases
Rent increases have eased after peaking at 17.2% year-on-year in February 2022.
Americans’ demand for housing has fallen this year after a boom in 2021 thanks to higher rental costs and generally high inflation, Zillow noted.
The analysis says more renters are doubling with roommates or family members, which is driving up rent vacancy rates and putting some pressure on landlords to keep rent increases in check.
This slower pace of rental growth is expected to show in official measurements of rental inflation in early 2023.
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Zillow also took a close look at the effects of rising rents on tenants.
According to the company, a San Diego tenant must work 85.5 hours each month before earning enough to pay the area’s typical rent of $3,110, new Zillow analysis shows. That’s more than 74 hours of labor that was needed five years ago.
Rents rose faster than ever last year, squeezing budgets as leases expired and renewals were due.
The rental market is now cooling, a Zillow spokesman says, but rent declines have not fallen enough to have a big impact on wallets.
While rents have risen, wages have not kept pace with inflation, the spokesman said. Rents on the San Diego Metro have increased 46.9% over the past five years. The median wage has only increased by 27%.
“Finding a rental in this market is stressful – 40% of tenants lose sleep during their search. Strategies like moving-in date flexibility and being one of the first applicants have helped recent tenants find a place to live,” he said.
Average-wage Americans have to work 62.6 hours to pay the typical US monthly rent.
In the last five years, rents have increased by 36.9%, while the average wage has only increased by 23%.
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Stone Distribution Co. said it will distribute beer made by Coronado Brewing Co. in Southern California and will represent a large portion of Southern California.
Coronado Brewing says its sales are up 20% year-to-date.
stone distributionFounded in the late 1990s, it is now one of the largest independent distributors of craft-only drinks in the country.
The distributor became a separate company, split from the Escondido base stonebrows earlier this year.
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Pizza delivery company and franchisor from Sacramento pizza guys – opens its first San Diego store in Pacific Beach.
The store is set in 1975 avenue of garnets, and is run by a local entrepreneur Behzad Kazemiaccording to a press release.
The chain hopes to have more locations in the region in the future.
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The 2,670-passenger cruise ship Diamond Princess has set sail from its new home in San Diego. The ship’s home import here highlights a group of recent departures from the operator Princess Cruisesfrom five to 16 days with excursions along the Mexican Riviera, the Californian coast and the Hawaiian Islands.
The schedule also includes a unique 20-day tour of Central America on November 27, according to a press release. The cruise line is part of the publicly held carnival corp
San Diego is the third busiest cruise port in California after LA and San Francisco, handling 93 ships before the COVID pandemic hit in 2020.
Port officials expect the terminal, which can accommodate three ships at a time, to recover this year as more than 90 cruise ships dock at the city’s two terminals during the peak season.
Princess Cruises operates a total of 15 ships in various global markets.
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Kearny Mesa Subaru rings in the holidays with its annual Share the Love food truck event, which benefits local nonprofits Meals on Wheels San Diego County.
This event is open to the public and attracts some of San Diego’s top food trucks to support nonprofit organizations in the area, including Meals on Wheels.
The trucks will compete for the title of Best Dish, with local celebrity judges voting on the food truck winner.
Visit sandiegomealsonwheels.org for more information.
In the past 14 years Subaru of America and its dealers have donated over $227 million to more than 1,700 charities in their hometown nationwide.
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And finally back to news about residential real estate.
Across the country, home purchases by investors fell 30.2% year over year in the third quarter, according to a new report by Home Sales and Renters redfin.
According to the report, this is the biggest drop since the Great Recession, barring the second quarter of 2020, when investor activity collapsed due to the outbreak of the pandemic.
And it outperformed a 27.4% nationwide decline in total home purchases.
Many of the cities where investor buying fell are regions that the report says have gained popularity during the pandemic.
These regions included San Diego, as well as Phoenix, Las Vegas, Sacramento, and Miami, which regularly feature on Redfin’s list of top migration destinations.
Investor buying here fell nearly 35% in October compared to October 2021.
Tom York is a Carlsbad-based independent journalist specializing in writing about business and economics. If you have any news tips you’d like to share, send them to [email protected].