Rents slipped in December but are still way above pre-pandemic levels
In 2024, rents will have a projected average decline of 0.2%
Real estate market headed toward 'slow-moving train wreck': Larry McDonald
Peebles Corporation founder and CEO Don Peebles and The Bear Traps Report founder Larry McDonald analyze market trends and the state of real estate.
Rents across the U.S. continuously declined throughout 2023 due to an influx of new multifamily apartments hitting the market and exerting downward pressure on prices.
However, it's only providing modest relief for renters. Rates are still well above pre-pandemic levels, and Realtor.com Chief Economist Danielle Hale doesn't expect them to return to that level in the future either.
"I do expect slowing rents, but I don't expect that magnitude of decline," Hale told FOX Business.
Data from Realtor.com's latest report showed how December marked the eighth straight month of year-over-year price declines in the rental market due, in part, to the "building boom" in recent years.
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A "for rent" sign in front of a home Dec. 12, 2023, in Miami, Fla. (Joe Raedle/Getty Images / Getty Images)
In the 50 largest metro areas across the U.S., the median asking rent for properties of all sizes fell to $1,713 in December, down 0.4% year over year. That's also down 3.5% from its July 2022 peak. However, studios saw the biggest drop, slipping 1% year over year to $1,437.
Even with these declines, the median asking rent is still 22% higher compared to the same time in 2019, underscoring the significant price pressures renters continue to face.
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According to the data, the median rent within western and southern metros saw notable declines due to supply outstripping demand. In the West, the median rent was down 1.6% last month compared to a year earlier. Major metros like San Francisco and Los Angeles saw annual declines of about 2.8% and 3.5%, respectively, according to the report.
A "for rent" sign in front of a home Dec. 12, 2023, in Miami, Fla. (Joe Raedle/Getty Images / Getty Images)
In the South, the data showed the median asking rent for properties slipped 0.5% compared to a year ago. Orlando, Florida, and Austin, Texas, saw the most significant declines last month at 6.2% and 5.4%, respectively.
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By contrast, the Northeast and Midwest faced sustained rent growth given there was more rental demand than supply.
Though prices are still elevated, Hale anticipates "continued weakness in the rental market" as more supply comes to the market.
Rents are likely to grow at a slower than usual pace for a few years, which will be a relative reprieve.
For 2024, in particular, experts are projecting rents to see an average decline of 0.2%, slightly lower than what we have seen in prior months.