Realtor.com® December Rental Report: Price Peak Behind Us as Rents Continue to Fall at Year's End
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Insights
From an economic perspective, the decline in U.S. median rents for eight consecutive months is indicative of a shift in the supply-demand dynamics of the housing market. The increase in supply, attributed to the recent construction boom, has outpaced demand, leading to downward pressure on rents. This trend is particularly noteworthy in the context of broader economic conditions, including high inflation and a potential cooling of the housing market.
While lower rents may provide temporary relief to consumers, they could also signal a broader economic slowdown. The regional disparities, with the West and South experiencing declines and the Northeast and Midwest seeing growth, reflect the uneven economic recovery post-pandemic. These variations can influence regional migration patterns and labor market dynamics, potentially impacting local economies and the broader national economic landscape.
The data on rental price movements across different metropolitan areas can inform real estate developers and investors about the current state of the market. The significant year-over-year declines in cities like Orlando, Austin and Dallas contrast with increases in New York and Boston, suggesting a rebalancing of rental desirability and potential shifts in investment focus.
Understanding these trends is crucial for stakeholders in making informed decisions about property development, investment and portfolio management. The increased supply of multi-family units, if it continues to outstrip demand, could lead to a long-term moderation of rental prices, which would affect the return on investment for rental properties and potentially dampen future development enthusiasm.
The reported year-over-year decline in median asking rents, especially in the Western metros, has implications for the real estate market. It suggests that the rental market is becoming increasingly tenant-friendly, which could lead to longer vacancy periods and lower income for landlords and property management companies. This trend could also affect property values if it persists, as rental income potential is a key factor in real estate valuation.
Additionally, the divergence in rental trends between regions indicates the importance of location in real estate investment strategies. Investors may need to reassess their portfolios, considering regional economic drivers, such as job market strength and housing supply growth, to mitigate risks associated with geographic concentration.
In December,
In December, the median asking rent for 0-2 bedroom properties in the 50 largest metros dipped to
"The rental market took a turn in 2023 as an influx of new multi-family apartments coming to the market exerted downward price pressure on median asking rents, which resulted in eight consecutive months of year-over-year price declines as we closed out the year," said Danielle Hale, Chief Economist at Realtor.com®. "Amid high inflation and costs, softening rental prices throughout 2023 offered renters a small reprieve, and looking forward, Realtor.com® anticipates continued weakness in the rental market for 2024, as a much-needed supply of apartment units continues to come onto the market and further impacts market dynamics."
December 2023 Rental Metrics by Unit Size – National
Unit Size | Median Rent | Rent YoY | Rent Change – Dec 2019 |
Overall | -0.4 % | 22.0 % | |
Studio | -1.0 % | 16.7 % | |
1-bed | -0.7 % | 21.7 % | |
2-bed | -0.4 % | 24.8 % |
Supply exceeds demand in West, South and pushed down prices, while Northeast, Midwest see the opposite
Regionally, rental trends in December mirrored patterns seen in October and November. In the West and South, supply exceeded demand, leading to a decrease in rents, while markets in the Northeast and Midwest experienced more rental demand compared to supply, resulting in sustained rent growth.
In December 2023, the median rent in the West was
In contrast, rents in populous Northeastern metros such as
Rental Data – 50 Largest Metropolitan Areas – December 2023
Metro | Median Rent (0-2 | YOY (0-2 |
-3.90 % | ||
-5.40 % | ||
1.00 % | ||
4.10 % | ||
6.30 % | ||
NA | NA | |
-2.80 % | ||
-0.50 % | ||
2.40 % | ||
4.70 % | ||
1.10 % | ||
-4.70 % | ||
0.20 % | ||
0.30 % | ||
NA | NA | |
2.40 % | ||
2.80 % | ||
0.20 % | ||
0.10 % | ||
0.70 % | ||
-3.50 % | ||
5.80 % | ||
-1.00 % | ||
-3.50 % | ||
5.00 % | ||
1.30 % | ||
0.00 % | ||
NA | NA | |
6.20 % | ||
3.60 % | ||
-6.20 % | ||
-1.00 % | ||
-2.70 % | ||
0.20 % | ||
-6.00 % | ||
NA | NA | |
-2.10 % | ||
5.60 % | ||
-3.10 % | ||
NA | NA | |
-1.20 % | ||
0.30 % | ||
-0.10 % | ||
-2.80 % | ||
1.80 % | ||
-1.20 % | ||
2.80 % | ||
-3.60 % | ||
2.70 % | ||
5.20 % |
Methodology
Rental data as of December for studio, 1-bedroom, or 2-bedroom units advertised as for-rent on Realtor.com®. Rental units include apartments as well as private rentals (condos, townhomes, single-family homes). We use rental sources that reliably report data each month within the top 50 largest metropolitan areas. Realtor.com® began publishing regular monthly rental trends reports in October 2020 with data history stretching back to March 2019.
With the release of its July rent report, Realtor.com® incorporated a new and improved methodology for capturing and reporting more comprehensive rental listing trends and metrics. The new methodology is expected to yield a cleaner, more representative and more consistent measurement of rental listings and trends at both the national and local level. The methodology has been adjusted to better represent the true cost of primary housing for renters. Most areas across the country will see minor changes with a smaller handful of areas seeing larger updates. As a result of these changes, the rental data released since July 2023 will not be directly comparable with previous releases and Realtor.com® economics blog posts. However, future data releases, including historical data, will consistently apply the new methodology.
About Realtor.com®
Realtor.com® is an open real estate marketplace built for everyone. Realtor.com® pioneered the world of digital real estate more than 25 years ago. Today, through its website and mobile apps, Realtor.com® is a trusted guide for consumers, empowering more people to find their way home by breaking down barriers, helping them make the right connections, and creating confidence through expert insights and guidance. For professionals, Realtor.com® is a trusted partner for business growth, offering consumer connections and branding solutions that help them succeed in today's on-demand world. Realtor.com® is operated by News Corp [Nasdaq: NWS, NWSA] [ASX: NWS, NWSLV] subsidiary Move, Inc. For more information, visit Realtor.com®.
Media contact: press@realtor.com
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SOURCE Realtor.com
FAQ
What was the median asking rent for 0-2 bedroom properties in the 50 largest metros in December 2023?
How much did the median asking rent decline from the prior December to December 2023?
What is the new peak in rent prices from their 2022 highs?
Which regions experienced a decrease in rents, and which saw sustained rent growth?
Which populous Northeastern metros experienced faster rent growth?
What is the new methodology for capturing and reporting rental listing trends expected to yield?
