Realtor.com® January Rental Report: Mild Relief for Renters Continues As Rental Prices Decline to Start New Year
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Insights
The recent trend of declining rental prices, as indicated by the -0.3% year-over-year drop, suggests a shift in the housing market dynamics. This could be a lagging indicator of economic softening, as rent prices are often closely tied to disposable income levels and employment rates. The fact that rents are still 18.3% higher than four years ago shows a significant growth over a relatively short period, which may have outpaced wage growth, leading to affordability issues.
Region-specific analysis indicates that the Midwest's slight increase in rents correlates with lower unemployment, which traditionally supports higher rents due to increased demand. Conversely, the South's larger supply of multifamily housing units has led to a decrease in rents, which could signal an overextension in rental property development relative to demand.
For investors and stakeholders, the current trend could imply a potential plateau or decline in income from rental properties. Moreover, the shift towards renting in expensive coastal cities, despite falling rents elsewhere, may suggest a redirection of real estate investment opportunities.
Analyzing the rental market requires an understanding of consumer behavior and demographic trends. The sustained demand for one-bedroom units, despite overall declining rents, indicates a market preference that could influence future real estate development. The preference for renting over buying in the current economic climate, due to high home prices and mortgage rates, suggests a continuing robust rental market in urban areas.
Investors in the real estate sector may consider the regional variances in rental trends when allocating resources. The rebound in rents in Western metros such as Los Angeles and Seattle, despite the general downward trend, points to market resilience and the potential for targeted investment strategies.
Understanding the nuances of these trends is crucial for stakeholders, as it can inform decisions related to property portfolio management, development focus and predicting future cash flows from rental properties.
The granular data on rental metrics by unit size and regional differences provide insights into the real estate market's health and trajectory. The decline in asking rents for studios and two-bedroom units, contrasted with the slight increase in one-bedroom units, could indicate a shift in consumer preferences, possibly driven by economic pressures or lifestyle changes.
Furthermore, the disparity in rental trends between regions, with some experiencing increases and others decreases, underscores the importance of location in real estate valuation. This information is vital for real estate investors and developers, as it highlights areas of both opportunity and risk. The focus on affordability and the balance between supply and demand are key factors that will continue to influence the rental market.
For businesses operating within the real estate sector, these trends can impact decisions regarding property acquisitions, development projects and portfolio diversification strategies. Additionally, the data can serve as a benchmark for setting competitive rental prices and anticipating market shifts.
In January,
In January, the median asking rent for 0-2 bedroom units in the 50 largest metros declined to
"Rental prices are declining, especially in places where new units are entering the market, but there's still plenty of demand driven by the large population of renters, including potential first-time homebuyers who remain on the sidelines for now," said Danielle Hale, Chief Economist at Realtor.com®. "Looking forward, Realtor.com® anticipates the rental market to decline only slightly in 2024, as an increase in the supply of new units is balanced out by continued enthusiasm for renting as a more affordable alternative to purchasing."
January 2024 Rental Metrics by Unit Size – National
Unit Size | Median Rent | Rent YoY | Rent Change - 4 years |
Overall | -0.3 % | 18.3 % | |
Studio | -1.0 % | 11.9 % | |
1-bed | 0.1 % | 17.9 % | |
2-bed | -0.6 % | 20.4 % |
Studios saw largest rent declines
The median asking rent for studios fell by -
Big Western Metros started to see rebound
In January 2024, the median rent in the West fell by -
Rents grow in Midwest markets, drop in the South
Asking rents in the Midwest rose by
Rental Data – 50 Largest Metropolitan Areas – January 2024
Metro | Median Rent (0-2 Bedrooms) | YOY (0-2 Bedrooms) |
-3.8 % | ||
-3.6 % | ||
-0.6 % | ||
-0.8 % | ||
2.7 % | ||
NA | NA | |
-0.1 % | ||
4.2 % | ||
1.4 % | ||
-2.0 % | ||
-2.5 % | ||
-1.0 % | ||
0.3 % | ||
-0.3 % | ||
NA | NA | |
2.8 % | ||
3.5 % | ||
-2.2 % | ||
3.1 % | ||
-1.8 % | ||
0.2 % | ||
2.7 % | ||
-5.5 % | ||
-3.4 % | ||
-0.9 % | ||
-0.4 % | ||
-2.3 % | ||
NA | NA | |
2.3 % | ||
2.2 % | ||
-1.9 % | ||
-2.0 % | ||
-4.0 % | ||
1.1 % | ||
-0.7 % | ||
NA | NA | |
-1.5 % | ||
-0.1 % | ||
-2.6 % | ||
NA | NA | |
0.9 % | ||
1.0 % | ||
1.1 % | ||
-0.6 % | ||
2.9 % | ||
1.3 % | ||
-3.6 % | ||
-1.1 % | ||
-0.4 % | ||
1.9 % |
Methodology
Rental data as of January 2024 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 January 2024 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 January 2024 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:
Sara Wiskerchen, press@realtor.com
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SOURCE Realtor.com
FAQ
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