New Rent Trends in the U.S.?

Forget the hippopotamus and the two front teeth. All they want for Christmas is an application fee and a security deposit, because those have reached new record costs across most of the country. 

What's going on with rental markets in the U.S.?

We posted recently about how the rental situation across Europe was looking (Rents balloon in Europe), and with Zumper's release of their National Rent Report, we can now catch a glimpse of what is happening here in the United States. The report analyzes rental data from over one million active listings across the country.  

Surprisingly, the report shares that one- and two-bedroom unit prices are down nationally month-over-month, for the first time in two years. It's definitely too early to tell if this will be a trend or a blip, but many renters are hoping that the drop will continue, with further reductions in rent ahead. 

Rent prices continue to decline gradually across much of the United States. Nationally, the median price for a one-bedroom is flat over last month; the two-bedroom median fell 0.4%. Nearly half the cities on Zumper’s list posted decreased or flat one-bedroom prices compared to last month; the two-bedroom median is down or flat in 60% of the top 100 cities.

There are some really interesting details in the report. First, let's peek at where rents are decreasing the fastest: Indianapolis (IN), Fresno (CA), Tulsa (OK), Rochester (NY), and Columbus (OH). If you are really looking for the absolute low end of rental rates, move to Akron (OH), Wichita (KS), Shreveport (LA), Lubbock, El Paso, or Laredo (TX). Then, let's consider where rents are rising the fastest: Baltimore (MD), Akron (OH), along with Fort Lauderdale, Miami, and Jacksonville (FL). Finally, we'll check the locations where people are feeling the most rental pain #coastalcities #notsuprising.

You can review all of the the details on the top 100 cities here.

In a nutshell, here is what Zumper says is happening right now: “We’re seeing pandemic trends begin to unwind, and unwind quickly, as renters hunker down in anticipation of a recession,” explains Zumper CEO Anthemos Georgiades. “Over the last two years we saw unprecedented rises in rent prices driven by a booming economy, low interest rates, a one-off spike in demand post vaccines, and supply chain issues that delayed new units coming to market. Now—with inflation and interest rates high and the labor market beginning to tighten—Americans are holding off on major economic decisions. Household formation has paused and even inverted, driving demand down and cooling off rent prices.”  

Now, different companies have different data too. Rent.com also has a November report that showed October rent prices are down month over month nationwide, a two-month trend that provides further evidence the market is stabilizing. The September decline, at 2.5 percent, was the first real monthly decline since February 2021 and the largest month-over-month decline since September 2020. 

Their information shows that among the 50 most populous U.S. metropolitan areas, Oklahoma City saw the largest year-over-year increase in rents - one of only two metros, including Raleigh, NC, to see increases greater than 20 percent. In total, 10 metros saw year-over-year increases greater than or equal to 10 percent. Another 10 metros saw year-over-year price declines, with Austin seeing a much-needed 8.7 percent decrease.

The following metro areas have experienced the biggest increase in rent prices year over year.

• Oklahoma City, OK (+31.7 percent)
• Raleigh-Cary, NC (+21.0 percent)
• Cincinnati, OH-KY-IN (+17.0 percent)
• Louisville-Jefferson County, KY-IN (+15.8 percent)
• Indianapolis-Carmel-Anderson, IN (+15.1 percent)
• Providence-Warwick, RI-MA (+13.6 percent)
• Salt Lake City (+13.6 percent)
• Nashville-Davidson-Murfreesboro-Franklin, TN (+13.2 percent)
• Pittsburgh (+12.8 percent)
• San Antonio-New Braunfels, TX (+10.6 percent)

Per NAR, high real estate prices have kept first-time buyers on the sidelines as renters and high rents have hurt their ability to save for down payments. The average age of first-time buyers has risen to 36 from 33 last year. The findings also show how Black Americans and Asian/Pacific Islanders have seen greater challenges becoming homeowners.

Lastly, Redfin shares that in October rents showed the slowest growth in 14 months, only having risen 7.8% year-over-year and down 0.9% month-over-month to reach a median monthly rent of $1983.