Will Rent Prices Fall in 2024?
Renters continue to ask about when apartment and house rent prices will fall.
According to >Redfin’s most recent news release, asking rents are beginning to go down faster. November’s numbers are down 2.1% year over year. Is this the leading edge of more vacancies and lower rent revenues for landlords? Other major rent price reporting centers report downward trends in prices.
The issue here, as you can see in these charts below, is that rents are perched high, so we wonder about continuing support if the economy is hit by the lagging effects of the FED rate hikes. With landlords doling out concessions and discounts, will the price drops accelerate?
Asking rents posting biggest declines last month. Screenshot courtesy of REDFIN.
AI predictive systems said that 2023 would be the year of the drop. However, it’s taken us to now where national rents are finally dropping off.
The rent price plateau was partly due to glut of new construction multifamily units being released in 2023, but more are scheduled for release in 2024. This and a slowing economy, hasn’t gone unnoticed by residential builders. Builder sentiment dropped strongly (down 6 points to 34 last month) and new residential construction has plummeted due to the (higher for longer) mortgage rate outlook. This means the current glut of new releases may be absorbed faster than expected during 2024.
Economy Ready to Roll next Summer?
And if the economy begins to roar again in Mid-2024, with lower FED rate rumors, that will raise employment, wages, and demand for rentals — prices would rise. The next 6 months may be the best time to sign a rental lease and you might want to ask for a longer lease (something that landlords might give a discount for).
What Could Raise or Lower Rent Prices?
Rent prices in influenced by a dynamic range of factors including national and local economies, government spending, interest rates and mortgage rates, residential construction, unemployment rates, immigration, income tax rates, property tax changes, wage changes and more. It’s not a simple thing for experts to predict whether rent prices will fall.
Lending Tree stats show that almost 5.5 million housing units are vacant across the nation’s 50 largest metros. The average vacancy rate across these 50 metros is 7.22%.
Zumper’s latest rent report for November reveals the new national median for a 1 bedroom fell .4% to $1,499, while 2 bedroom rentals fell 3% to $1,856 per month. 50% of the metros on Zumper’s top 100 list are down year-over-year.
More units available with slightly falling rents means conditions are a little better for renters heading into the winter season.
Rent.com Asking Rents
Rent.com’s stats show asking rents across the US are taking a dive into rare negative territory, most pronounced in the Northeast and West.
US National Asking Rents. Screenshot courtesy of Rent.com
Change in Asking Rents to October. Screenshot courtesy of Rent.com
Falling from a High Plateau
If the economy does cool in the next 6 months, as predicted by many economists, with rising costs, a stifled housing market, government shutdowns, and more, renters will likely see asking rents fall further. From California to New York and Miami, rent prices were driven up well beyond inflation and at some point, demand had to decline.
Higher rent prices have been driven by:
- residential construction resistance in government
- high renter demand
- fast-rising interest rates
- inflationary costs
- persistent low vacancy rates
- massive increases in immigration
- homebuyers who must remain as renters
And these factors don’t look to be subsiding. Additionally, the White House has massive spending bills slated to push funds out in 2024 and that will have an effect on persistent inflation. So although the price trend is downward right now, lower interest rates and new spending could send them rocketing upward again in 2024/2025.
Currently, there is a large volume of multifamily units being released, which lowers asking prices, however, that glut is expected to be absorbed in 2024.
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Rents Easing in Some Regions
Rent.com’s recent reports show rents are down year over year most significantly in Colorado, Oregon, Washington, Oklahoma, Texas and Florida. New York, Minnesota, Mississippi, Kansas and South Carolina saw the largest YoY increases.
Rent.com reported that prices dropped again in October by 1.5% from September. After 6 months of rent rises, we’ve seen two months of falling rents. The national median rent prices in the US now sits at $1,978.
Year-over-price declines have been negative in three of the last six months, following 36 months of rises.
Zumper Rent Price Report
As always, Zumper’s rent price trend graphic tells us that rents have leveled down to near zero.
Rent price growth decreasing 2022/2023. Screenshot courtesy of Zumper October report.
Zumper’s Latest Rent Price Data
As explained in our updated rent price report, some cities are still seeing big monthly increases in rent. Certain cities are seen as very desirable to renters either for their location, lifestyle, employment outlook, or rent price. People will move to find an affordable rental.
That means these same cities are ideal for landlord investors searching for the best places to buy property.
Zumper Report: Highest Gains in Rent Prices
For 1 bedroom rentals in major metros, Norfolk, New Orleans, Akron, El Paso, and Fresno posted the strongest rises vs September. In 2-bedroom rentals, New York, Boise, Plano, Augusta, Long Beach, Henderson, and Nashville posted the strongest gains.
| (Zumper Stats) | One Bedroom | Two Bedrooms | ||||
| City | Price | M/M% | Y/Y% | Price | M/M% | Y/Y% |
| Norfolk, VA | $1,280 | 5.80% | 2.40% | $1,360 | -2.90% | 0.70% |
| New Orleans, LA | $1,500 | 5.60% | -1.30% | $1,750 | 0.00% | -2.80% |
| Akron, OH | $760 | 5.60% | 10.10% | $880 | -1.10% | 0.00% |
| El Paso, TX | $830 | 5.10% | -2.40% | $1,110 | -0.90% | 0.90% |
| Fresno, CA | $1,310 | 4.80% | -1.50% | $1,600 | 0.00% | 0.60% |
| Wichita, KS | $680 | 4.60% | -4.20% | $860 | -4.40% | 0.00% |
| Lincoln, NE | $800 | 3.90% | -5.90% | $1,070 | -5.30% | 2.90% |
| Plano, TX | $1,470 | 3.50% | -2.00% | $2,000 | 2.60% | 2.60% |
| New Haven, CT | $1,690 | 3.00% | 0.00% | $1,980 | 1.50% | 0.00% |
| Buffalo, NY | $1,060 | 2.90% | -1.90% | $1,250 | 0.00% | 9.60% |
| Sacramento, CA | $1,500 | 2.70% | -3.80% | $1,850 | 0.50% | -2.60% |
| Augusta, GA | $860 | 2.40% | -7.50% | $960 | 2.10% | -12.70% |
| St. Louis, MO | $890 | 2.30% | -11.90% | $1,250 | -3.10% | -5.30% |
| Lexington, KY | $930 | 2.20% | 6.90% | $1,200 | -3.20% | 1.70% |
| Tucson, AZ | $920 | 2.20% | -2.10% | $1,240 | -1.60% | -4.60% |
| Syracuse, NY | $990 | 2.10% | 3.10% | $1,200 | -2.40% | -0.80% |
| Charleston, SC | $2,000 | 2.00% | 0.00% | $2,360 | -1.30% | 0.00% |
| Houston, TX | $1,300 | 1.60% | -3.00% | $1,610 | 0.60% | -4.20% |
| Boise, ID | $1,330 | 1.50% | -7.60% | $1,450 | 3.60% | -4.00% |
| New York, NY | $4,300 | 1.40% | 13.50% | $5,000 | 4.60% | 13.10% |
| Durham, NC | $1,450 | 1.40% | 14.20% | $1,720 | 1.20% | 15.40% |
| Des Moines, IA | $950 | 1.10% | 3.30% | $1,180 | 0.00% | 19.20% |
| Boston, MA | $2,990 | 1.00% | -0.30% | $3,500 | 0.60% | 1.40% |
| Urban Honolulu, HI | $1,950 | 1.00% | 8.30% | $2,690 | -0.40% | 12.10% |
| Bakersfield, CA | $1,050 | 1.00% | -6.30% | $1,350 | -3.60% | -3.60% |
| San Antonio, TX | $1,050 | 1.00% | -9.50% | $1,360 | -2.20% | -5.60% |
| Richmond, VA | $1,310 | 0.80% | -6.40% | $1,530 | 0.00% | -1.30% |
| Henderson, NV | $1,440 | 0.70% | -3.40% | $1,750 | 1.70% | 0.00% |
| Orlando, FL | $1,570 | 0.60% | -7.10% | $1,850 | -1.10% | -6.10% |
| Long Beach, CA | $1,800 | 0.00% | 1.70% | $2,450 | 2.10% | 1.20% |
| Nashville, TN | $1,750 | 0.00% | 2.90% | $1,950 | 1.60% | 7.10% |
| Dallas, TX | $1,390 | 0.00% | -2.10% | $1,940 | -1.00% | -1.50% |
Zumper shows More Cities with Declining Rent Prices
As Zumper’s stats reveal in the chart below, prices are trending down in some cities including Anchorage, Memphis, Tulsa, Baltimore, Indianapolis and Greensboro leading the way.
| (Zumper Stats) | 1 Bedroom Rentals | 2 Bedroom Rentals | ||||
| City | Price | M/M% | Y/Y% | Price | M/M% | Y/Y% |
| Anchorage, AK | $1,310 | -5.80% | 5.60% | $1,600 | -4.80% | 12.70% |
| Memphis, TN | $890 | -5.30% | -12.70% | $1,000 | 0.00% | -6.50% |
| Tulsa, OK | $920 | -5.20% | 3.40% | $1,120 | -0.90% | 7.70% |
| Baltimore, MD | $1,350 | -4.90% | -2.20% | $1,590 | -3.60% | -3.00% |
| Indianapolis, IN | $1,100 | -4.30% | 6.80% | $1,300 | -1.50% | 7.40% |
| Greensboro, NC | $910 | -4.20% | -17.30% | $1,170 | 0.00% | -2.50% |
| Shreveport, LA | $750 | -3.80% | 2.70% | $870 | -2.20% | 4.80% |
| Colorado Springs, CO | $1,150 | -3.40% | -6.50% | $1,500 | 0.00% | -3.20% |
| St. Petersburg, FL | $1,450 | -3.30% | -5.20% | $2,000 | -3.40% | -8.30% |
| Chattanooga, TN | $1,270 | -3.10% | 3.30% | $1,480 | -1.30% | 2.80% |
| Glendale, AZ | $1,240 | -3.10% | -8.10% | $1,450 | 0.00% | -15.70% |
| Tampa, FL | $1,600 | -3.00% | -3.00% | $1,900 | -1.00% | -0.50% |
| Madison, WI | $1,380 | -2.80% | 1.50% | $1,680 | -1.20% | -2.90% |
| Newark, NJ | $1,450 | -2.70% | 3.60% | $1,800 | 0.60% | 4.00% |
| Portland, OR | $1,420 | -2.70% | -7.80% | $1,800 | -3.20% | 0.60% |
| Louisville, KY | $1,080 | -2.70% | 1.90% | $1,180 | -2.50% | -7.10% |
| Washington, DC | $2,330 | -2.50% | 1.30% | $3,090 | -2.20% | -1.30% |
| Miami, FL | $2,600 | -2.30% | -2.30% | $3,500 | -1.40% | 0.60% |
| Oakland, CA | $2,090 | -2.30% | -6.30% | $2,700 | -1.80% | -3.60% |
| Raleigh, NC | $1,300 | -2.30% | 2.40% | $1,560 | -1.90% | 2.00% |
| San Jose, CA | $2,480 | -2.00% | -2.40% | $3,110 | -2.20% | -1.00% |
| Cincinnati, OH | $980 | -2.00% | -2.00% | $1,400 | 0.00% | 2.90% |
Some news agencies predicted a coming relief from high rents last year, however that didn’t happen as demand/supply factors didn’t change. The FED says it’s not likely to reduce the central bank soon (higher for longer). And a massive influx of immigrants arrived and needed to be housed on top of the persistent, severe shortage of apartments and other housing.
Homebuyers will Stay as Renters for the Foreseeable Future
New multi-family construction has been brisk with plenty coming on the market, however that glut of releases is expected to be absorbed quickly. With the economy slowing in 2024, and “higher for longer” interest rates, homebuying will be subdued. Zillow sees a big drop in home sales for 2024. There is the specter of a great housing market reset that has to be weighed into the outlook.
In a Yahoo Finance report, Sipho Simela, CEO and founder of Matrix Rental Solutions said, “As rising home prices, coupled with tight inventory and rising interest rates, deter prospective homebuyers from entering the market, many may find themselves staying on the sidelines and continuing to rely on rental housing for longer than initially anticipated,”
SFR Houses under Intense Excessive Demand
Corelogic’s September report on single-family rentals found:
- single-family rent prices rose 2.6% year over year in September.
- Rental costs declined by -0.2% in September, consisent with seasonal changes, before the pandemic.
- Lower-priced houses (75% or less than the regional median): rose 3.6%, but down 12% year over year
- Lower-middle priced houses (75% to 100% of the regional median): rose 3.1%, yet 11.4% lower than one year ago
- Higher-middle priced (100% to 125% of the regional median) rose 2.3% yet dropped 10.6% year over year.
- Higher-priced (125% or more than the regional median): rose 1.9% from previous month yet are down from 8.7% year over year.
- Attached versus detached: Attached single-family rental prices rose 3% year over year while detached rentals grew 2%.
House shortages ensure sales prices will remain elevated and this will encourage higher rent prices in the SFR market along with more demand for multifamily units.
Overall, renters may find some rental bargains in the next 6 months and negotiate some good leases with landlords.
When landlords are using ManageCasa to manage their properties, you know they’re doing all they can to get their costs down so they keep rent prices down. Technology brings benefits to renters too!
See more on the amazing ManageCasa property management platform.
* the data and interpretations above are those of the author and not necessarily those of ManageCasa, it’s partners and affiliates.
See also: Property Management | How to Ask for Rent Payment | Rent Prices | Rental Market | Tenant Engagement | Renter Tips | HOA Voting Software | HOA Software | Rental Virtual Tours | Florida Rental Market | Florida Housing Market | Florida Rental Properties | Best Florida Cities to Buy Property | Best Cities to Buy Property in California | Best Type of Property to Buy | How Landlords Raise Rent Prices | Management Software
