lthough the U.S. economy has been slow to gain traction in recent years, real estate has remained consistently strong over the last seven years. However, that might change in the near future; those following housing trends are likely aware of the overproduction of luxury apartments in recent years. Coupled with rising interest rates, this might spell the end of the Chandler luxury apartments boom.
The Wall Street Journal has predicted that 2017 will be the year this bubble bursts. Notably, the average cost of rent only rose by about 3.5% in 2016, down from the average of 5+% for previous years. Throughout America, upscale property owners and landlords are preparing for a prolonged real estate dry spell. This will likely entail a substantial lowering of rent prices, and offering many concessions to renters. In New York City and Los Angeles, many landlords are now offering several months of free rent or parking for certain residences.
This presents a problem for property owners, but it's a much-needed ebb in housing costs for renters; rent has climbed by more than 25% since the first quarter of 2010. It would be one thing if these increasing rates matched inflation or a growth in income, but it has been steadily rising while these other factors remain largely stagnant. This year looks like the start of a substantial "leasing drought", which may last for years, barring major changes.
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