Asking Rents For All Bedroom Counts Fell For First Time In Four Years
And that’s for asking rents. Effective rents could be even lower, though harder to measure.
For all the talk of multifamily rent growth rates going up or down, a new Redfin report on 33 metro regions takes on a different aspect as important, if not more so. What is happening with today’s asking rates/?
The answer is a year-over-year drop across all bedroom counts for the first time since 2020. The national median asking rent of $1,647. That’s down $53 from 2022’s record high.
The median asking rent for studios and 1-bedroom apartments was $1,498 a month, down 0.1% year-over-year. For two-bedroom apartments, the average asking monthly rent was $1,730, down 0.3%. And for three or more bedroom apartments, the rent was $2,010, off by 2.4% over last year. All three categories are down at least $50 from recent all-time highs.
One reason for falling prices might be vacancy rates. The national figure has stayed at 6.6% for the last four quarters, the highest rate since 2021. For buildings with at least five apartment units — the subject of the report — the rate was 7.8%, up from 7.4% a year ago. Increased vacancy means more supply than demand, which should trigger falling prices.
However, in the zero-to-one and two-bedroom categories, asking rents fell far less than larger apartments. Redfin said that was true because even with increased supply there has been higher demand in those categories.
“Construction is slowing down and prices will eventually start rising again, but now is still a good time for renters to find a deal, especially families looking for an apartment with at least three bedrooms,” said Redfin senior economist Sheharyar Bokhari, in prepared remarks.
The distribution of rent changes varies by geographic region. Texas and Florida saw big drops. These are two states that saw some of the largest amounts of multifamily construction.
The biggest drops by metro were Austin, TX (16.9%); Jacksonville, FL (14.3%); San Diego, CA (12.7%); San Francisco, CA (7.6%); and Tampa, FL (5.9%).
The changes may not be important. The graphed data shows some slight variations over time, and this may be some volatility. Also, numbers based on asking rents may not represent actual rents because landlords might have needed to offer concessions to fill units.
The results from this study also may be due to the specific metros covered. For example, Apartment List’s rent report for July saw prices up year over year, but that includes data from 100 metros. Similarly, RealPage’s apartment forecast projected positive rent growth based on 50 markets.