Relief eludes many tenants as Fed raises interest rates

Already, new construction home has fallen sharply as borrowing costs rise, rising 14.4 percent in May to its lowest rate in more than a year. early data suggest: that apartment building is also taking a hit – something industry executives can confirm.

David Wali, who runs the Boise office of the Gardner Company, a developer of residential and commercial real estate across the west of the mountains, said the question of whether to build is clouded by inflation, rising interest rates and the ongoing disruption. of supply chains. leaving builders worried they might finish projects, be ready to rent the units, “and be left without appliances.”

Those risks, in turn, have led lenders to become more conservative by requiring developers to put more of their own money into projects, further hindering development.

Mr Wali has already started delaying projects, including 500 apartments in the Boise area, and said that as the lack of new development works its way through the system in the coming months, supply will come under even more pressure. . The flip side — good for him, bad for renters — is that rising rent demand makes him feel good about the rental levels of apartments his company already owns.

“They are fantastic,” he said.

The country may be seeing a geographic shift in which rental markets are hot. Early in the pandemic, when remote working gave people geographic flexibility, places like Orlando and Tampa, Fla., and Rochester, NY, experienced marked rental growth. Now some cities in the middle of the country are cooling down, while offices remind workers and coastal markets like New York City is heating up†

“I’ve been practicing for 42 years and I’ve never seen the huge, general demand for rent increases that I’m seeing now,” said Samuel Himmelstein, a tenant rights attorney in New York City, who said clients are now reaching out to him regularly to ask. see if they can do something about the landlords who demand 20 to 30 percent higher rent.