Rhode Island Rents Are Up, Up and Away and Going Higher

Rhode Island Rents Are Up, Up and Away and Going Higher

It is getting a lot more expensive to put a roof over one’s head in Rhode Island.  And, the upward trend is true for buyers and renters.

As GoLocal has reported, the cost of buying a single-family home in Rhode Island is not the only thing that is seeing dramatic price increases.

The median price of a single-family home was $384,000 in July -- 16% higher than that of July 2020 and the number of homes available for sale was 20% lower.

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Now, the cost of renting an apartment is skyrocketing in Rhode Island, and, especially, in Providence.

Providence rents have increased over 13% in the past 12 months — overall, RI rents are up over 10%, according to Apartment List.

Nationally, the increase in the cost of rentals is driving inflation and even the Federal Reserve is worried that this is the type of inflation that will undermine the economic recovery.

"In a June report, economists at Fannie Mae said they expected the rate of shelter inflation to pick up from around 2% in May to 4.5% over the coming years—and higher still, if house-price growth doesn’t cool off soon," reports the Wall Street Journal.

 

Providence Rents to Continue to Increase for Next 3 Years

Leading U.S. commercial real estate group CBRE is projecting rents to continue to skyrocket in Providence.

Throughout the Providence submarket, CBRE Economic Advisors is forecasting 4.8% rent growth in 2022 and 3.4% in 2023.

Projections of rental prices are even more explosive in outbound years — in 2024 and 2025 — annual rental prices in Providence are expected to increase by more than 5% annually.

In 2020, the actual price of the average rent was $1,553 in Providence and that number is now expected to jump to $1,726 by 2023.

As costs continue to rise, inventory is also expected to remain extremely limited — in 2023 the occupancy rate is expected to be 96.4%.

Nationally, the number of occupied U.S. rental-apartment units jumped by about half a million in the second quarter, the biggest annual increase in data going back to 1993, according to industry consultant RealPage Inc. Occupancy last month hit a new high of 96.9%, reports Bloomberg.

The Wall Street Journal reports that "Invitation Homes Inc., the largest single-family landlord in the U.S., raised rents by 8% in the second quarter, including 14% on leases signed by new tenants. Invitation reported occupancy of more than 98%, an extremely tight market."

Inventory is growing, but far too slowly.

New apartments are coming online, but the new construction is often smaller properties. But while units are being proposed, in construction, and being completed, some other units are being taken off the market. The historic Arcade and its 48-residential micro lofts were taken to condo.

And, the River House -- the 174 unit apartment complex developed by Wexford was flipped to Brown University. The developer received $9 million in state subsidies and in the sale realized a $22 million profit.