With more and more households fed up with the rising cost of rent and with homeownership often more affordable on a month-to-month basis, rents hit a wall in the fourth quarter last year.
On the heels of MPF Research's report earlier this month that said rent increases fell last year compared to 2011, RealFacts also says the skyrocketing rent trend is coming to an end.
RealFacts' database consists of 3,300,000 rental units, in more than 13,000 properties located in 96 metropolitan statistical areas in 14 states. The properties include apartment rentals from studio-size to townhomes in complexes of 50 or more.
The rental data cruncher said the national average rent increased by $21 a month to $1,209 in the second quarter of 2012. Landlords tacked on another $13 a month average increase in the third quarter.
However, in the fourth quarter of 2012, rents simply stopped growing, actually dropping an average $2 a month to $1,040 a month.
"What has changed in the past quarter? Demand for single-family housing. Statistics confirm a more robust for-sale housing market is now emerging, recovering from its long hiatus," said says Sarah Bridge, founder and managing member of RealFacts LLC.
Bridge added, "Where there was once a bloated inventory of houses for sale with many homeowners losing homes to foreclosures or opting for a short sale to avoid foreclosure, new listings are now fewer and far between. Combined with the short supply are record low interest rates currently hovering at around 3 to 3.5 percent."
What's more, metropolitan areas that experienced the highest rent growth are now becoming centers of housing recovery.
"How we confirm that rents have hit the wall is by examining primary market leaders of the recent past like San Francisco (rents up 8.8 percent on the year) and San Jose (rents up 9.3 percent on the year). For the past several quarters, those market leaders have experienced a slight but consistent decrease in occupancy rates, which is an early indicator of rents falling," Bridge said.
"RealFacts made its prediction that San Jose and San Francisco would peak in early 2013, but it appears this has already happened in the fourth quarter of 2012," she added.
Other recovering for-sale housing markets with soaring rents include, Boulder, CO where rents rose nearly 11 percent on the year; Charlotte, NC, up 8.4 percent; Seattle, WA, rents up 7.8 percent; Greensboro, NC, up 7 percent; Denver, CO, up 6.7 percent; Salt Lake City, UT, up 5.9 percent; Austin and Houston, TX, up 5.7 percent and 5.5 percent, respectively, according to RealFacts.
Less room for rental growth is the general trend, but there are exceptions.
Fourth quarter rents also rose in Miami, FL; Greensboro-High Point, NC; Bakersfield, CA and Atlanta, GA.
Occupancy rates show mixed results with half the markets on the rise and half on the decline.
"We may see increased occupancy in the near future as rents are priced at sustainable levels, or we may see vacancy on the rise if a glut of new construction hits a market all at once," Bridge said.