As of September, monthly rental costs saw a year-over-year decrease for the fifth straight month, according to research gathered by Realtor.com. The report looked at rents for studios, one-bedroom, and two-bedroom properties in the country’s 50 largest metro areas. Overall, the median asking rent fell 0.7 percent in September to $1,747 per month. That’s down $5 from August and a whopping $29 from July 2022, when prices were at their peak.
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So, what’s contributing to the decline? The biggest factor, it turns out, is extra inventory. New apartment construction is booming, and according to data from RentCafe, it is on track to hit a record high this year, with almost 461,000 units expected to come online by the end of December 2023. To keep up with demand, an additional one million new apartments are set to be delivered by 2025.
“Although this additional rental inventory is undoubtedly a positive development for renters, the rapid rate at which these units are being absorbed suggests that demand in the rental market remains robust,” says Realtor.com senior economist Jiayi Zu.
Migration hotspots, including Austin, Texas, saw the biggest decline in monthly rental costs. Prices in the city dropped 7.3 percent year-over-year, followed by Dallas, which saw a 6.2 percent dip. Portland, Oregon, and Orlando, Florida, saw the third-biggest decrease at 5.4 percent. “In today’s market, we are seeing high home prices and record mortgage rates,” adds Zu. “Declining rent means buying is not as urgent and renting is more favorable.”
Alternatively, rents are actually spiking in some of the country’s typically more affordable areas. For example, the median rent in both Louisville, Kentucky, and Richmond, Virginia, surged 4.6 percent to $1,199 per month in September. And, unsurprisingly, in New York City, the median rent increased 6.5 percent to $3,097 per month.
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