Redfin Report: Renters Catch a Break as Costs Drop for Third Straight Month in December
09 January 2024 - 12:00AM
Business Wire
Rising supply has led to rising vacancies,
motivating landlords to lower asking rents, which fell 1% from a
year earlier.
(NASDAQ: RDFN) —The median U.S. asking rent fell 0.8% year over
year in December to $1,964, according to a new report from Redfin
(redfin.com), the technology-powered real estate brokerage. That’s
the third consecutive decline, following a 2.1% annual drop in
November—which was the largest since 2020—and a 0.3% dip in
October.
December rents were little changed from the prior month
(-0.2%).
The rental market has lost steam largely due to a jump in supply
fueled by a building boom in recent years. That has left many
landlords struggling to fill vacancies, motivating some of them to
drop asking rents. Some landlords are also offering one-time
concessions like a free month’s rent or reduced parking costs to
attract renters. This means the prices renters are paying in total
are likely coming down faster than they appear to be in the
data.
Other reasons rents have cooled include economic uncertainty,
slowing household formation, and affordability challenges, as rents
are still only 4.4% below their record high. Additionally, there
are new signs that the economy is slowing; Americans are starting
to tighten their belts, which could be contributing to the decline
in rents.
“High supply—more so than low demand—is driving rent declines.
But if mortgage rates continue to drop at a fast clip in 2024,
slowing rental demand could become a major driver of rent
declines,” said Redfin Economics Research Lead Chen Zhao. “That’s
because more Americans would ditch the rental market to become
homeowners, leaving landlords with even more vacancies.”
There are more newly built and under-construction apartments in
the U.S. than there were a year ago; the number of completed
apartments is near the highest level in more than 30 years, and the
number under construction is just shy of its record high.
Because renters have an increasing number of buildings to choose
from, vacancies have climbed. The rental vacancy rate rose to 6.6%
in the third quarter—the most recent period for which data is
available—the highest level since the first quarter of 2021.
Rents Rise in the Midwest and Northeast, Fall in the West and
South
The median asking rent in the Midwest rose 3.7% year over year
to $1,434. Rents also rose in the Northeast, climbing 1.7% to
$2,439. Meanwhile, rents fell 1% year over year to $1,632 in the
South, and declined 0.6% to $2,346 in the West.
Rents are likely holding up best in the Midwest and Northeast
because those regions haven’t been building as much as the South
and West, meaning some landlords have less incentive to drop prices
because they’re not dealing with as many vacancies.
“With rents falling and vacancies rising, now is a good time to
shop around or try to renegotiate your rent if your lease is
up—especially if you’re a renter in the South or West,” Zhao
said.
To view the full report, including charts and methodology,
please visit:
https://www.redfin.com/news/redfin-rental-report-december-2023
About Redfin
Redfin (www.redfin.com) is a technology-powered real estate
company. We help people find a place to live with brokerage,
rentals, lending, title insurance, and renovations services. We
also run the country's #1 real estate brokerage site. Our
home-buying customers see homes first with same day tours, and our
lending and title services help them close quickly. Customers
selling a home in certain markets can have our renovations crew fix
up their home to sell for top dollar. Our rentals business empowers
millions nationwide to find apartments and houses for rent.
Customers who buy and sell with Redfin pay a 1% listing fee,
subject to minimums, less than half of what brokerages commonly
charge. Since launching in 2006, we've saved customers more than
$1.5 billion in commissions. We serve more than 100 markets across
the U.S. and Canada and employ over 4,000 people.
For more information or to contact a local Redfin real estate
agent, visit www.redfin.com. To learn about housing market trends
and download data, visit the Redfin Data Center. To be added to
Redfin's press release distribution list, email press@redfin.com.
To view Redfin's press center, click here.
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version on businesswire.com: https://www.businesswire.com/news/home/20240108038362/en/
Redfin Journalist Services: Kenneth Applewhaite, 206-414-8880
press@redfin.com
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