Rent Prices Are Declining. Here's What You Need To Know
If you're renting a house or apartment, you've likely seen the impacts of rising rates since the start of the pandemic. Low supply and high demand, especially in larger cities, have led to landlords increasing prices, and widespread inflation has only worsened the issue. Thankfully, according to the Apartment List National Rent Report, we're finally seeing some cooling in this trend.
The data in this report points to a widespread decrease in rental rates over the last four months, larger than the seasonal declines that are typical around this time of the year. Prices fell 3% from August to December, the sharpest decrease Apartment List has recorded to date. This data definitely points to a larger trend that's underway, but don't get too excited just yet — the actual impacts of this phenomenon probably won't be felt by most renters immediately. Keep reading to learn what you need to know about this decrease and how it might apply to your life in the coming months.
Why are rent rates decreasing?
According to the data from Apartment List, these decreasing rates point to an overall shift in the market caused by an increased supply of available apartments. This is true, however, the data is reflective of new leases and leaves out renewals of existing leases, so it skews a bit more extreme than what's actually happening. With this methodology, prices appear to ebb and flow at record-setting levels, but the actual impacts on the average consumer are much more subdued.
To round out the picture a bit more, look at the Consumer Price Index. According to the U. S. Bureau of Labor Statistics, the rent rates of primary residences are still increasing after seasonal adjustments month-to-month from August to November, despite massive dips in the Apartment List Data. This, however, doesn't mean all hope is lost if you're looking to save some money on housing. There are still some reductions expected to hit in the coming months, or, at the very least, some cooling in the increases we've seen happening in the last few years.
What to expect coming up
The main driving force behind rent increases, besides inflation, is the lack of supply of apartments and increased numbers of renters, especially as the housing market continues to price out buyers. Now, however, new apartment construction is on the rise again, so in the coming months, the boom in prices should begin to level out as landlords begin setting more competitive rent rates to attract customers. If you're already locked into a lease, this likely won't mean much change in what you're paying, but if you're on the hunt for a new apartment, you could see more reasonable rates on your search.
Overall, this decrease in Apartment List's data is still pointing to a sunnier future for renters ahead, just not immediate changes in the market as it appears at first glance. Either way, it's still a good sign that extreme hikes are finally easing, and potential renters will have more power and choices in the future.