Rents are starting to come down after spiking to record levels this past summer, but experts are uncertain if the slowdown will continue.
Rents are starting to come down after spiking to record levels this past summer, but experts are uncertain if the slowdown will continue.
Christopher Mayer, professor of real estate at Columbia Business School, said people looking for an apartment now might have a better experience than they did in May or June.
“We’re not seeing rents go up as quickly, the rental market is softening a little bit,” he said.
The national median asking rent was up 14% in July over July the previous year, the smallest annual increase since November 2021, according to a new report from Redfin. While that percentage is still high, it has decreased from 15% in June and 16% in May.
Experts say the market could slow further toward the end of the year, but there’s still a lot of uncertainty.
“I would not be surprised if we get to 2023 before things really get back to normal,” said Brian Carberry, senior managing editor of Rent.com, an apartment search website owned by Redfin.
Much depends on where you live. Cities in Florida such as Boca Raton and West Palm Beach have seen rents decrease -0.1% and -0.5% respectively compared to last month. But according to Apartment List, rents in California coastal cities such as San Diego have continued to increase over the past year.
In Rochester, N.Y., rent was up 15.3% in August over the same month the previous year, according to data from Apartment List. An average two-bedroom apartment in the Rochester area was $1,318 in August, compared with $1,116 a year ago.
Bank of America CEO Brian Moynihan said high rents are a concern because they can account for a big chunk of a household’s take-home pay.
“Gas prices are coming back down, but rents are going up 10, 12, 15%. And rent can end up taking 40% of these households’ income,” Moynihan said in a recent Associated Press interview.
While things are looking a bit better for renters than a few months ago, it’s still a landlords’ market, Mayer said.
If your lease is up, staying put and negotiating with your landlord might be a better option than trying to move, at least until the rental market slows down further, said Paula Munger, assistant vice president for industry research and analysis at the National Apartment Association.
“When you renew your lease, you’re definitely not paying the same as someone new moving in,” Munger said. “If you can, stay in your apartment.”
A major reason for rent spikes has been increasing demand from people priced out of a booming housing market. That market is starting to slow, which could mean more people can afford to buy and won’t need to rent, but with interest rates rising, some may not want to take on mortgages.
“With inflation now all throughout the market, there’s not enough supply so the prices are going up,” Munger said. “That’s the downside for people, just not having enough options and choices for what they would like in a housing unit.”
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