Apartment Rents Post Biggest Drop Since Pandemic
Landlords are also granting significant concessions.
The boom in apartment completions, with more on the way, has given renters greater options in the most desirable markets and at a cheaper rent.
Median asking rents fell year-over-year in November by 2.1%—the biggest annual drop since February 2020—and by .6% month-over-month, according to Redfin, to reach a median rent of $1,967. The Midwest is the only region that saw rents rise YoY in November.
With so many new units to fill, many operators are offering concessions and slashing asking rents.
“Better deals are easier to come by because landlords are doling out concessions and rents have started falling in a meaningful way,” Redfin Chief Economist Daryl Fairweather said in prepared remarks.
“Rising supply also means renters have more good options to choose from. With homeownership so expensive, renting has started to lose its stigma,” he continued.”
“Still, we may see more renters jump into the homebuying market next year as home-sale prices and mortgage rates tick down.”
While rents are dropping, they are still 22.1% higher than they were in November 2019 before the pandemic housing boom and are just 4.2% below the $2,054 record high hit in August 2022.
Furthermore, the rental vacancy rate rose to 6.6% in the third quarter, the highest level since the first quarter of 2021, Redfin said.
The number of completed apartments in the U.S. rose 7% year over year in the third quarter to a seasonally adjusted annual rate of 1.2 million, one of the highest levels of the last three decades, Redfin said.
Apartment buildings starts have slowed, however, down 26.2% in Q3. Some analysts are suggesting a further 30% to 50% decline for 2024.