Relief excludes many tenants as Fed raises interest rates
Already, new home construction has fallen sharply as borrowing costs soar, dropping 14.4 percent in May to the lowest rate in more than a year. Early data suggests that apartment construction has taken a hit, too – something industry executives can attest to.
David Whaley, who runs the Boise office for Gardner, a developer of residential and commercial properties across the Western Mountains, said the question of whether to build has been clouded by inflation, rising interest rates and continued disruption to supply chains, which has builders worried that they They may finish projects, be willing to rent out units, and “leave no equipment.”
The state of jobs in the United States
Job gains continue to maintain their impressive streak, easing fears of an economic slowdown but complicating anti-inflation efforts.
These risks, in turn, have caused lenders to become more conservative by requiring developers to put more of their own money into projects, further hampering development.
Wali has already begun delaying projects, including 500 apartments in the Boise area, and said that as a lack of new development works its way through the system in the coming months, supply will be even more squeezed. The flip side – good for him and bad for tenants – is that the increased demand for rents has left him satisfied with the rent levels in the apartments his company already owns.
“This is wonderful,” he said.
The nation may be experiencing a geographic shift in which rental markets are hot. Early in the pandemic, as telecommuting gave people geographic flexibility, places like Orlando, Tampa, Florida, and Rochester, New York, saw clear growth in rents. Now, some cities in the middle of the country are getting colder, even as offices call in workers and coastal markets like New York City are heating up.
“I’ve been playing the sport for 42 years and have never seen the massive, mass demand for rentals I see now,” said Samuel Himmelstein, a tenants rights attorney in New York City. He said clients are reaching out to him regularly now to see if there’s anything they can do about requests. Landlord to get 20 to 30 percent higher rent.