Thursday, July 28, 2016

Moderately Priced New Construction Keeps St. Louis Rents Low, Study Finds

Posted By on Thu, Jul 28, 2016 at 6:00 AM

click to enlarge Apartments in downtown St. Louis. - PHOTO COURTESY OF FLICKR/PAUL SABLEMAN
  • Photo courtesy of Flickr/Paul Sableman
  • Apartments in downtown St. Louis.
You may have heard about the apartments in the Central West End now leasing for $5,000 a month. Five thousand! And you may despair about the ways that once-affordable neighborhoods like Shaw and McRee Town — sorry, Botanical Heights — are getting increasingly pricey, forcing renters to the north or east.

But as it turns out, things aren't so bad here — and we have, in part, new construction to thank for that.

That's according to a new study from real estate search site, which analyzed fifteen major metro markets. By dividing rental housing into three tiers based on price, its analysts found that demand for lower-end rentals across the nation is booming — even while new supply has mostly catered to the higher end.

That's left many U.S. renters struggling to find places to live. In L.A., for example, low-end apartment prices shot up 27.5 percent in the last year. In Sacramento, that increase was a horrifying 32 percent. Philly, Dallas, Boston, San Francisco and Miami all showed double-digit increases — a nightmare for renters.

But in St. Louis, the study found, prices have remained relatively affordable. Apartments in the lowest tier are up just 5.5 percent from the prior year, the smallest increase of the fifteen markets surveyed.

That's not because demand is dropping, Zillow says. Instead, it found that 25 percent of new construction that's come online in the last three years in the St. Louis area has been priced in the lowest tier. That's helped sate demand and keep prices affordable.

And that's even though our high-end market is thriving. Sixty-two percent of new construction has been in the highest tier, and so prices in St. Louis' high tier increased 8.1 percent year-over-year — a bigger increase than the one shown in Chicago, Philadelphia, Miami-Ft. Lauderdale, Boston or Dallas.

But because our middle tier held steady, and our lower tier wasn't driven up to the point of many other cities, overall the market maintained its affordability, Zillow found — with rental prices overall increasing less than one percent from the prior year in Zillow's index.

So. We're sure some local naysayers will find some way to spin this — but can't we just be happy for once? This is something St. Louis has been doing right. And while a 5.5 percent rent increase isn't anything to wish for on low-income renters, think twice before you start bitching: Things could be much worse.

You could be living in Sacramento. 

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