Rent prices impacted by 'apartment-building boom,' Redfin chief economist says
Median rent prices soared over $2,000 in parts of 2023
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Landlords are lowering rent prices thanks to an "apartment-building boom," according to Redfin chief economist Daryl Fairweather.
"Median monthly rent prices hit a high of over $2,000 in 2023, mainly due to high mortgage payments that pushed potential buyers into the rental market instead," she told Fox News Digital. "However, prices have since changed due to an apartment-building boom. There are many vacant properties right now, and the supply jump has caused landlords to lower prices."
In November, median rents were $1,967, according to data from Rent.com. Within the past 12 months, rents peaked in August 2023 to $2,052.
Landlords are lowering rent prices thanks to an "apartment-building boom," according to Redfin chief economist Daryl Fairweather. (Getty Images / AP Photo)
Fairweather also pointed to Americans who moved around the country during COVID as having driven up rental costs. But that trend has since slowed.
"People were also moving at a rapid rate during the pandemic, so rentals were in high demand," she said.
"There are other factors also contributing to lower rent prices, such as slower-growing household formation and economic uncertainty," she continued. "Household formation slowed in 2022, which tempered rental demand after the pandemic moving frenzy."
The cause of that "pandemic moving frenzy" was partially because of the economy but also because "factors like inflation and high interest rates all discourage household formation," the economist said.
"Despite more recent improvements on inflation and a strong jobs market, consumer sentiment remains low," Fairweather said. "Redfin expects that to improve once the Fed cuts rates again."
The Federal Reserve is expected to cut interest rates this year. While Chair Jerome Powell recently told reporters that a March rate cut is likely off the table, some economic experts predict that the Fed will change course in May.
Fairweather explained that rental prices "have since changed due to an apartment-building boom," increasing the supply of rentals and forcing landlords to "lower prices" as a result. (Gabby Jones/Bloomberg via Getty Images / Getty Images)
Fairweather also spoke on rent challenges for Gen Z Americans who have also suffered under "stagnant homeownership rate[s]" between 2022 and 2023.
"Just over one-quarter of Gen Zers owned a home in 2023, so renting is the reality for most of that generation," she explained. "However, there’s still a lot of hope for Gen Z: They are still outpacing young people of the past when it comes to homeownership."
Many Gen Z homeowners bought during the pandemic when mortgage rates hit historic lows, which made that entrance into homeownership more feasible at a young age," the economist explained
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Fox Business' Megan Henney contributed to this report.
