It's no secret that the cost of living in America has been on the rise for quite some time. One expense that seems to be affecting people the most is the cost of housing, and more specifically, the cost of rent. According to recent data, Americans are spending a staggering 30% of their income on rent alone.
With cities such as New York seeing rental increases of 19% in October 2022 alone, far above the national average of 12.3% during the same window of time, and NYC now topping out with an RTI of a incomprehensible of almost 70%, there are trend lines that are far beyond the Moody data also notes that the rent-to-income (RTI) was up by 1.5% in Q4 of 2022, meaning a consistent growth rate through the third and fourth quarters of 2022. All of this data means that for #propertyinvestors, the #investment proposition for buy-and-hold investment remains strong and convincing with increased mortgage rates making it harder for renters to transition into buyers in today's market.
The issues are complex, with shortage of affordable housing, rising property values, and stagnant wages each being contributory factors towards high rental rates and while there remains no easy solution, it's likely that #investors can remain confident that things will not change.
Meanwhile, all is not rosy for every part of the rental market and indications are #investors should be wary of the commerical real estate market.
A CBRE report in January revealed that San Francisco commercial real estate vacancies shot up to 27.2% after continuously increasing for 12 quarters. The report indiates one major reason for the vacancies is San Francisco's close relations to tech with increasing rates and savage macroeconomic environment were cited as reasons tech companies cut their workforce dramatically leading to knock-on effects across the commercial landscape.
With commercial space fulfillment on the dip and a largest annual jump in Q4 year-on-year for the last 4 years. It should be notesd that subleases, however, increased by 8% quarter-over-quarter, meaning that the businesses aren't leaving but rather downsizing. And while this might represent a light for some investors the reality is, with banks like Goldman Sachs, Citigroup and Morgan Stanley also reducing their workforce, it doesn't look like this element of the rental landscape will be changing any time soon.
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