The housing market had a crazy year in 2022, and the rental market fell alongside the chaos. As housing prices rose, so did rents. Now, as 2023 kicks off, experts at Realtor.com say rent prices may finally come down.
In November, a new report from Realtor.com found that rental prices in nine of the 50 largest metro areas are showing year-over-year declines. That’s up from seven of the 50 largest cities just a month ago, as the nationwide rental market correction continues. And for subways that were already seeing rents turn south before November, prices fell below October prices.
Here are the nine metros where rent prices are down from last year:
- Riverside, California was the first to record a median rent of $2,071 in November 2022, which translated to a year-over-year rent change of -5.5%. Riverside’s appeal is that it’s much cheaper than neighboring Los Angeles, where median rents were $2,864, and San Diego, at $2,784 in November. However, it is still the most expensive metro on this list.
- Next is Las Vegas, Nevada, with a median rent of $1,481 and an annual change of -4.9%, up from the -3% change from the previous month.
- Sacramento, California follows in third place with a median rent of $1,838 and an annual change of -4.8%. Many newly distant workers left the dear Bay Area and moved to Sacramento, where real estate prices and the cost of living were significantly lower. This has driven up rental prices here, but now that the influx of new residents is waning and space prices are falling, prices have started to come back down to earth.
- New Orleans, Louisiana ranks fourth with a median rent of $1,371 and a -2.8% year-over-year change. The decreases could be due to the the city extends its ban on short-term rentals, like homes listed on Airbnb, last year. Many of these homes could be put back on the market as rentals or sold to buyers who plan to live there.
- Fifth is Phoenix, Arizona with a median rent of $1,600 and an annual change of -2%. As mortgage interest rates soared, investors and homebuyers have since backed off in Phoenix as many were overpriced. Now, the slowdown has spread to the sprawling rental market in the metro area.
- Sixth is Atlanta, Georgia, with a median rent of $1,689 and an annual change of -1.8%. Atlanta stands out for having the most expensive studio rents on the list, even though overall rent prices there are otherwise in the middle of the pack, reflecting the continued high demand for dense housing in the metropolitan area’s urban core.
- Tampa, Florida ranks seventh with a median rent of $1,783 and an annual change of -1.8%. For around the average rental price in Tampa, someone can get a relatively new apartment with modern amenities in historic Ybor City.
- Jacksonville, Fla., is eighth with a median rent of $1,454 and an annual change of -0.8%. Jacksonville is relatively affordable, compared to the other metro areas on the list, and it has become a hotspot for new residents during the pandemic. But a shift from positive to negative growth in rental prices could indicate a general cooling of the region’s housing market.
- Finally, in ninth place is Austin, Texas, with a median rent of $1,656 and an annual change of -0.6%. Austin was emblematic of the pandemic-era mass migration to sunnier, cheaper cities. And, as a result, prices have skyrocketed. But for the first time in at least 20 months, Austin’s rental prices are now headed down.
Main takeaways:
“Finally, the steady pace of steep and often unsustainable lease increases across the United States is slowing, and rents have even begun to decline in many of the nation’s hottest real estate markets. These falling prices are good news for renters who have been through the wringer,” said Evan Wyloge, data reporter at Realtor.com and author of the report. “Rent prices have risen more than 20% in the past three years, while incomes have only increased about 10%, according to data from Realtor.com® and the US Census Bureau.”
Wyloge added that “the places where rents are falling the most are American cities in the Sun Belt, west and south, where the climate is warmer and, in many cases, housing is traditionally more affordable.” .
“People have started returning to big cities,” said Jiayi Xu, an economist at Realtor.com. “During the pandemic, people were moving to Sun Belt areas like Florida. Now, when we look at data from Boston and Chicago, demand is on the rise there. »
For the full report, Click here.
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