Robert McGarvey has an article out in TheStreet.com (“Priced Out of Dallas — And Other Real Estate Embarrassments”) about how rental growth has spread from the traditional high-rent markets of New York or San Francisco to the traditionally lower cost-of-living cities like Dallas and Atlanta. While it is not a deep dive into the economics and drivers of these trends, McGarvey does a terrific job with the broad strokes about what drives the growth and what the implications are for renters, millennials in specific. I’m also briefly featured in the article in regards to the reason for much of the high-end development pushing growth.
It comes down to brass knuckles economics. “The money [for new high end construction] influx is caused by developers and investors chasing yield,” said Patrick Sprouse with Urban Igloo, an apartment rental website. Yield right now looks to be in pricey rentals. It definitely is not believed to be in middle-income housing.
And also in regard to how that growth affects existing residents who cannot afford the higher rents.
Word of advice for frugal renters from Richardson: “This trend is not affecting every part of every city. It happens in some neighborhoods, but not in others a few miles away.”
Sprouse said similar but with a different twist: “Some renters will certainly get priced out of in-demand neighborhoods and pushed to longer commutes or lower tier/quality properties.”
This trend does indirectly get at the economic issue of our time as well, which is income inequality, which is often well covered by the Larry Summers and Thomas Pikettys of the world.