Topline
The median asking rent price fell by 0.4% year-over-year in the U.S., according to a report by real estate brokerage Redfin, marking the first annual decline since the pandemic, and suggesting rates are finally returning to normal.
Rent prices fell annually for the first time in three years.
Key Facts
The median asking rent in the U.S. dropped to $1,937, the lowest in 13 months, according to Redfin, which said the decline is complemented by a surplus of rental availability.
Rent prices fell the most in Austin, Texas (11%), followed by Chicago (9.2%), and New Orleans (3%).
Despite declines in most major markets, other cities experienced increases, including Raleigh (16.6%), Cleveland (15.3%), Charlotte (13%), Indianapolis (10.5%) and Nashville (9.6%).
The real estate firm previously reported an annual decline in median home-sale prices (2.3%), the largest decline since at least 2012.
Redfin noted the rental market is “cooling” because of inflation—which fell for a ninth-straight month in March—unemployment and fears of a recession.
Top 10 Cities With Biggest Rent Declines
- Austin, Texas (11%)
- Chicago, Illinois (9.2%)
- New Orleans, Louisiana (3%)
- Birmingham, Alabama (2.9%)
- Cincinnati, Ohio (2.9%)
- Sacramento, California (2.8%)
- Las Vegas, Nevada (2.4%)
- Atlanta, Georgia (2.3%)
- Phoenix, Arizona (2.1%)
- Baltimore, Maryland (2%)
Crucial Quote
Dan Close, a Redfin real estate agent, said rent prices are “just returning to normal” after they “ballooned during the pandemic, and are now returning to earth.”
Surprising Fact
509,000. That’s how many privately owned housing projects were completed in February, according to Federal Reserve Economic Data, the most since 1987.
Key Background
A decline in rent prices follows a report from the Federal Reserve earlier this week that suggested rent was “by far the largest contributor” to inflation. This is despite a decline in energy prices, which decreased by 3.5% in March. Lower rent prices are also complemented by a steep decline in rental demand, according to Harvard University’s Joint Center for Housing Studies. Vacancy rates are also nearing a 20-year average after hitting a historic low during the pandemic, as some landlords have been prompted to cut rent or offer concessions—like discounted parking—to prospective renters, according to Redfin.
Further Reading
Rents Drop To The Lowest Level In a Year (Forbes)
Prices Rose Another 5% In March—Lowest Inflation Reading In Nearly Two Years (Forbes)
Source: https://www.forbes.com/sites/tylerroush/2023/04/14/rent-drops-annually-for-first-time-in-three-years-heres-where-prices-dropped-the-most/