Rents Start to Cool Off, But New Jersey Renters Still Face High Costs
Rents in August were just 0.28% higher than August 2022, according to RealPage. Compare that to a year ago, when rents were posting 11% annual growth. With the exception of a very brief drop during the Covid lockdowns, rents have not shown negative annual growth in well over a decade. When they did, it was due to a recession hitting demand.
That is not the case now. Apartment occupancies nationally are at a pretty healthy 94%, which is right along historical norms. High mortgage rates combined with high home prices and tight supply have kept more would-be buyers in the rental market. The issue instead is just a massive amount of apartment supply.
The number of new units being built is at a 50-year high, with more than 460,000 being completed this year alone. Over a million new units have been built in the past three years. That’s a record, and much of that supply is on the higher end. Renters have more options, so landlords have less pricing power as turnover increases. You can observe this on your own. It seems like every new construction being built is a new luxury apartment building, strip mall with apartments being constructed above it, or former commercial buildings converted into residential apartments.
New Jersey Rents
New Jersey is one of the states where rents have not yet gone negative, but they are slowing down. The average rent for a two-bedroom apartment in New Jersey is $1,742, which is up from $1,628 in 2022. However, the growth rate has slowed from 11% to just 1.9% year-over-year.
Looking ahead, it is likely that rents in New Jersey will continue to slow down in the coming months. The supply of new apartments is expected to remain high, and demand is not expected to increase significantly. As a result, landlords may have to lower their rents in order to attract tenants.
This is good news for renters in New Jersey, who are finally starting to see some relief from the high rents of recent years. However, it is important to note that the rental market is still volatile, and it is possible that rents could start to rise again in the future.
