This smallish city attracts a sizable number of retirees, has a problem keeping its young people and a substantial chunk of its economy relies on tourism.
Myrtle Beach, S.C., shares some of those attributes with Santa Fe and one more: Rents in each city are about the same and getting higher.
Santa Fe, in terms of rent increases and the cost of rental housing, is statistically grouped with cities as disparate as Encinitas, Calif., Webster, Texas, and Meridian, Idaho. All have seen median rent increases in the 6 percent range year over year, according to Apartment List, an online rental marketplace. The company’s data showed a 4.6 percent median rent increase in Myrtle Beach between June and July, but information on an annual increase was unavailable.
Nationwide, rent is up by 1.2 percent in the past year, according to Apartment List. In New Mexico, median rents are up 0.7 percent since August 2017. One bright spot: The pace of rental increases is slowing, including in overheated markets such as Seattle and Portland, Ore.
By comparison, Orlando, Fla., one of the largest U.S. metro areas where rents are growing fastest, also saw a 6 percent increase in the past year, according to Apartment List.
“There are still a lot of people out there struggling with housing costs and I don’t see that changing any time soon,” said Chris Salviati, an economist at Apartment List.
In cities such as Santa Fe, where the economic recovery from the Great Recession lagged behind boomtowns like Meridian, a suburb of Boise, demand for rental units is outpacing supply. That means continuing rent increases in the coming years, he said.
Although market factors in each city differ, median rents in Santa Fe, Meridian and Myrtle Beach range from $868 per month for a studio apartment in Santa Fe to about $1,130 for a two-bedroom unit in all three cities to $1,930 for a four-bedroom unit in Meridian.
In Meridian, demand for housing springs in part from a sellers’ market in real estate and a lack of new multifamily construction to accommodate displaced tenants. Myrtle Beach attracts vacationers and a growing number of retirees from the Northeast. In Santa Fe, job growth is creating a housing shortage, Salviati said.
“Santa Fe is doing better, economically speaking,” he said. “New Mexico is one of those states that lagged generally from the recession but in more recent years is starting to see economic activity and job growth pick back up. Job growth is the demand side, and housing needs to make way for that demand. If construction doesn’t keep up, then you see rising rents.”
New construction might slow rising rents, but new units take time to come online and typically lease at rates higher than existing units. According to the city Land Use Department, developers have 1,487 apartment units in 11 separate projects in various stages in Santa Fe, from plan review to building permit applications to construction underway. Three projects totaling 413 units — 87 of them for senior housing — are actually under construction, according to Noah Berke, department planner manager.
Nonetheless, rents in Santa Fe will continue to climb for some time to come, said Todd Clarke, an analyst with NM Apartment Advisors Inc., an Albuquerque firm.
“I don’t see it slowing down,” Clarke wrote in an email Wednesday. “In fact, with moderate job growth on the horizon, I see rental increases accelerating.”