Redfin Reports Asking Rents for New Apartments Drop 6% to Lowest Level Since 2022, as Finished Buildings Soar
26 September 2024 - 10:30PM
Business Wire
Asking rents dropped at the same time new
apartment completions rose to the highest level in at least 12
years
(NASDAQ: RDFN) — Asking rents for newly constructed apartments
fell to $1,746 in the second quarter, down 6.2% from a year earlier
to the lowest level in more than two years. That’s according to a
new report from Redfin (redfin.com), the technology-powered real
estate brokerage.
It was the second consecutive quarter that rents for newly built
apartments posted an annual decline and the second-steepest drop in
the past five years—trailing only this year’s first quarter, when
rents fell 7.5%.
That’s according to a Redfin analysis of the U.S. Census
Bureau’s data for newly-constructed, unfurnished, unsubsidized,
privately financed rental apartments in buildings with five or more
units, dating back to the first quarter of 2012. The most recent
data available measures apartments that were completed in the first
quarter of 2024, and either rented or not rented within three
months of then.
Apartment building construction boom leading to lower
rents
Monthly asking rents for new apartments hit a peak of $1,889 in
the first quarter of 2022, but have trailed off since, as the
number of newly constructed apartments shot up. Apartment
completions rose 18.7% in the first quarter year over year to reach
the highest number in over a decade.
“Rents for new apartments will likely fall a little more this
year, because there are still a ton of new buildings being
completed,” said Redfin Senior Economist Sheharyar Bokhari. “With
new apartments popping up everywhere, owners are competing with one
another to find tenants by reducing rents and offering concessions
like free parking. If you’re a renter in a market like Dallas or
Nashville, where construction has been booming, there are likely
deals to be found.”
An example of how much impact new construction has on asking
rents can be found in Austin, TX, where overall rents (for new and
existing apartments) fell 17.6% in August year over year, according
to Redfin’s Rental Tracker. Austin—like many Sun Belt metros—saw
some of the highest levels of multifamily housing construction over
the past few years, but rents are now starting to fall as supply
increases and demand levels off.
Newly-built one-bedroom apartments have seen the largest rent
declines
Rents for one-bedroom apartments—the most common type of new
apartment—fell the most in the second quarter, down 9% year over
year to $1,566. Two-bedroom apartments dropped 4.5% to $1,934,
while three-or-more-bedroom apartments fell 3% to $2,309.
Studio apartments saw asking rents climb slightly, up 0.9% to
$1,617. The median asking rent for newly constructed studio
apartments is more volatile and—like this month—can sometimes be
higher than those for one-bedroom apartments. That’s because there
are far fewer studios being built and they are more likely to be
located in larger, more expensive cities.
To view the full report, including charts please visit:
https://www.redfin.com/news/new-construction-rents-Q2
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 run
the country's #1 real estate brokerage site. Our customers can save
thousands in fees while working with a top agent. Our home-buying
customers see homes first with on-demand tours, and our lending and
title services help them close quickly. Customers selling a home
can have our renovations crew fix it up to sell for top dollar. Our
rentals business empowers millions nationwide to find apartments
and houses for rent. Since launching in 2006, we've saved customers
more than $1.6 billion in commissions. We serve more than 100
markets across the U.S. and Canada and employ over 4,000
people.
Redfin’s subsidiaries and affiliated brands include: Bay Equity
Home Loans®, Rent.™, Apartment Guide®, Title Forward® and
WalkScore®.
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/20240926385085/en/
Redfin Journalist Services: Kenneth Applewhaite
press@redfin.com
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