Historic rent growth In New York and other cities
In July 2022, for the 17th consecutive month, rents in the United States reached an all-time high with a 12.3% increase in prices. Major cities such as New York, Boston, Chicago and Orlando experienced the largest increase. They debate whether or not the country entered a recession.
Rent prices have risen across the United States, but especially in cities where they were already expensive, such as New York. As pandemic-era leases come to an end, renters in the Big Apple are facing historic price hikes that, in some cases, exceed $5,000 per month, up 20% from the same period last year.
Meanwhile, national rents in July averaged US$1,879 as of July, up 12.3% from a year ago, causing U.S. renters to perceive an increase in their leases of about US$300 per month over the previous value according to the U.S. portal realtor.com.
Cathy Linch had to move out of the house she was living in in June. When she got there during the pandemic, her landlord told her that he would keep the price, or maybe, at most, raise the rent by 8%.
But when she wanted to renew her contract two months ago, the owner told her that the increase would be 65%, reaching US$ 2,800 per month. I didn’t feel able to pay that on my own, it’s just impossible,» according to France 24.
New Yorkers are finding it increasingly difficult to find options, as confirmed by real estate broker Gia Ann Curatola, who assures that the war in Ukraine, the increase in interest rates and inflation have created great uncertainty in the real estate market.
Americans now prefer to rent rather than buy, and demand has doubled, she said. «That’s contributing to very high rents because there is an increase in demand without at the same time an increase in supply,» he added.
The situation is such that even the New York City Council has stepped up its promotion of the affordable housing lottery offered by the city. «After the pandemic, the new prices of apartments and buildings have had a big impact and this has always been an option that has been there, it just needs people to know about it,» says Grabriel Di Gennaro, a volunteer with the Fundavenyc foundation.
A better view in the coming months?
According to experts, the situation could start to improve next month, when rents are expected to begin to stabilize.
Danielle Hale, chief economist at U.S. portal realtor.com believes that «July’s data shows that rent growth is stabilizing at a relatively slower pace than in 2021.»
The quarterly survey by real estate rental and sales portal Avail also showed that prices were flat in the second quarter compared to the previous quarter after high costs in January and April.
Has the U.S. entered recession, yes or no?
Revised preliminary GDP data for the second quarter of the year, released Thursday, shows that the economy contracted at a more moderate pace than initially indicated, although the decline, 0.1% (not 0.2% as published at the end of July), confirms the second consecutive negative quarter. This, in theory, means technical recession. The diagnosis, however, will have to wait until the National Bureau of Economic Research (NBER) coins the definitive rating in a few months’ time. The data will be reviewed again in September, according to María Antonia Sánchez-Vallejo, El País correspondent in Madrid.
The U.S. Department of Commerce reported that GDP, adjusted for inflation, fell by 0.1% in the second quarter of the year and by 0.6% in annualized terms. This is a three-tenths of a point improvement from the first estimate in July (0.9%), and is well below the 1.6% in the first quarter.
The figure is a slight increase from the data provided by the government last month, but still implies a contraction. Recession or not, many other indicators of the economy’s performance, led by the strength of the labor market, seem to belie the gloomier scenario. While GDP contraction for two quarters in a row meets the definition of a technical recession, the rest of the data points to a slower pace of expansion in the economy, rather than a recession.
The revision to second-quarter GDP reflects that retail sales were stronger than initially reported in May, and that strength persisted through June and July. Industrial production reached an all-time high in July, while business spending held up. The labor market continues to generate jobs and the unemployment rate is 3.5%.
