Pamela Liebman, president and CEO of The Corcoran Group, discussed the real estate market on Tuesday, stressing that the sticker shock for rents have been "really crazy."
She noted that some rents increased by 50% compared to the same time last year.
"There have been 12 months of consistently increasing rental prices so every month it’s going up," the real estate expert told "Mornings with Maria" on Tuesday, noting that the trend is "starting to slow a little bit."
Rent prices across the country have been taking a significant bite out of consumer budgets with some renters getting hit particularly hard over the past year.
Liebman noted that Brooklyn was experiencing "its highest rents ever" as well as other parts of New York City. She also noted that rent prices in Miami Beach are "out of control," just as other parts of Florida are.
"So what does that do? It pushes people to other surrounding areas," she noted.
Rent – a real estate website owned by the brokerage Redfin – analyzed which U.S. cities were experiencing the most expensive rental prices based on increases in the area from June 2021 to June 2022.
What Rent researcher Jon Leckie has discovered was that there have been particularly "steep price increases in peripheral markets across the country."
For instance, although Manhattan has been grabbing headlines for its eye-popping rent costs, Jersey City, New Jersey, sitting right across the Hudson from the Big Apple, is considered the most expensive city for renters, according to Rent data obtained by FOX Business.
In Jersey City, the average monthly rent surged from $3,308 in June 2021 to $5,500 in June 2022, according to Rent data obtained by FOX Business. That's an increase of 66.25% in a one-year period.
Another example is Freemont, California. Rents in Freemont surged 45% year-over-year, one of the largest increases tracked by Rent. In comparison, rents in San Francisco and San Jose increased 7.5% and 25%, respectively.
"You can work from home in so many instances, you have a lot of flexibility; you don’t have to live in these cities," Liebman said on Tuesday, noting why many people have moved to areas outside major cities.
She stressed that while higher mortgage rates have been driving people to rent, there are simply not enough rentals.
HOUSING MARKET RECORDS SHARPEST DECLINE IN SALES IN ALMOST TWO DECADES: REPORT
The interest rate-sensitive housing market has started to cool noticeably in recent months as the Federal Reserve moves to tighten policy at the fastest pace in three decades. Policymakers already approved a 75-basis point rate increase in both June and July.
A significant number of sellers — particularly in pandemic hot spots — dropped their asking prices in July as more buyers backed out of the market, according to a new report.
In Boise, Idaho, nearly 70% of homes for sale fell in price, as owners "struggled to match their expectations with the reality of the cooling housing market," according to technology-powered real estate brokerage Redfin.
Boise had the highest share of price drops in 97 markets analyzed by Redfin in July. Overall, more than 15% of home sellers in every major U.S. metro dropped their asking price in July, according to the real state brokerage.
Industry economists have warned that an increasing number of homeowners have been backing out of the market in part because of elevated mortgage rates taking a bigger bite out of their budgets.
Although 30-year fixed mortgage rates fell 0.09% to 5.13% last week, it's still well above 2.27% which is where the 30-year fixed mortgage rate stood at this time last year, according to mortgage buyer Freddie Mac.
Liebman stressed that, across the country, "we’ve seen areas that experienced this incredible boom during the pandemic," and that, in those same areas, "we are starting to see incredible price drops."
She said the trend is noticeable in cities across the country.
"If you have a certain type of house, you’re good – but weak mortgage rates have really put a damper on the first-time buyers and even on luxury buyers… Even though they tend to be cash buyers, money isn’t as cheap as it was and people think that maybe things are slowing down," Liebman said.
"We were in quite a race there and it had to stop. I mean, the market really needed to take a pause. Prices were out of control."
Fox Business’ Daniella Genovese contributed to this report.