Home rental rates in Honolulu have risen steeply over the last year, according to a new report that says the increase locally is more than double the average for more than 30 major mainland metropolitan areas.
It cost $2,675 on average to rent a three-bedroom house in Honolulu in the second quarter, up 14.8 percent from $2,331 in the same quarter last year, according to the report from national residential property management company Real Property Management and Westminster, Colo.-based real estate information provider RentRange LLC.
The gain was the sixth-biggest among 34 major metropolitan areas, and compared with a 6.1 percent average increase to $1,320 for all the markets.
“Rental rates are up in the Honolulu area and we expect that trend to continue in the near future,” Kawika Burgess, president and CEO of the Real Property Management office in Honolulu, said in a statement. “There are a lot of economic indicators supporting this trend, not the least of which is the continued shortage of affordable rental housing on the island of Oahu.”
Rising home prices is another factor, though the cost to buy a home has gone up more modestly this year. The median price for single-family homes sold this year through June on Oahu is up 2.3 percent to $685,000 from $669,500 in the same period a year earlier.
Honolulu’s average rental rate of $2,675 was the second most expensive following $2,916 in the San Francisco-Oakland area.
High rents contribute to the growing homelessness problem on Oahu.
In April, the City and County of Honolulu released its 2015 “Point-in-Time” homeless count of that showed 4,903 people were living in homeless shelters or on the streets, up 4 percent from 2014 and up 34.7 percent from 2009. The survey showed that 60 percent of those people were sheltered, with the rest living on the streets, the largest number on the street since 2009.
The Real Property Management rent report was based on three-bedroom homes in the Honolulu metropolitan statistical area, which is the entire island of Oahu.
The biggest rent increase among metro areas was a 22 percent rise in Ames, Iowa, to $1,203 in the second quarter from $985 a year earlier. Only one area had a decrease. That was New York-Northern New Jersey with a 0.9 percent dip to $2,330 from $2,351.
More broadly across the nation, rents have risen 3.5 percent in the 12 months through June, matching the biggest jump since 2008 based on U.S. Labor Department data cited by Bloomberg News.
Bloomberg reported that a historically low rental vacancy rate is contributing to rental rate growth. The Census Bureau’s U.S. rental vacancy rate, which tracks the share of properties that are unoccupied, fell to 6.8 percent in the second quarter to hit the lowest level using comparable data since 1985, the Bloomberg report said.
Ed Stansfield and Andrew Hunter, economists at Capital Economics Ltd., wrote in a note to clients that they forecast rents will grow at an annual rate of 5 percent both this year and next, representing “the fastest rate of rental growth since the 1980s,” Bloomberg reported.
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