In which areas of the United States are rental prices falling the most?
In the midst of a hot real estate market, a recent report indicates that rental prices are falling in some parts of the US. Find out where these areas are.
Steep housing prices in the United States are not affordable for many, which is why millions of people choose to rent houses or apartments. After the covid-19 pandemic, rental prices skyrocketed. However, a recent analysis indicates that they have fallen in some areas.
According to Realtor.com’s latest report, the rental market in the US experienced its first year-over-year decline in May, down 0.5% for 0-2 bedroom properties in the largest metropolitan areas in the country.
The two-bedroom median rent was $1,923 nationally, $10 less than the same period last year and still $47 less than the July 2022 peak.
“The rent decrease will bring a sense of relief to tenants who have been dealing with financial challenges for the past several years. Also, since the rent increases were steeper for new tenants, many existing tenants chose to avoid higher costs by renewing their leases and staying where they are,” according to the report.
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In which areas of the United States are rental prices falling the most?
According to the Realtor.com report, rents in metropolitan areas in the West have fallen faster than those in the Northeast. In May 2023, the median rent in the West was 3.0% lower than a year ago. The biggest year-over-year drops are in Las Vegas (-6%); the Riverside and San Bernardino area in California (-5.9%); and Phoenix (-5.7%).
San Jose, California (1.0%) was the only large western metropolitan area to experience rent growth, but the growth rate was only one-twentieth of what it was a year ago (19.3%).
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How rental prices will evolve by 2023
Realtor.com forecasts rental prices to fall -0.9% in 2023. In the second half of 2023, demand for rental properties is expected to remain strong.
“While we expect a small year-over-year decline in rental prices, it is important to note that rental levels remain remarkably high. As a result, affordability remains a top concern in the rental market”, said the report.