See Rents Drop for First Time in Two Years After Climbing to Records: Nationwide, rents declined on a monthly basis in August amid new apartment construction and weaker consumer sentiment by Will Parker of The WSJ.
One of the shift factors for demand is the price of a substitute. Substitutes are two different goods that can both be used for the same purpose. As this article says, the increase in home prices helped cause the demand for apartments to increase.
Excerpts:
There was a "23% overall increase in rent since August 2020" [thru Aug. 2022].
"As more households feel priced out of the sales market because of rising mortgage rates and near-record sales prices, overall demand for rentals is unlikely to fall drastically, said Orphe Divounguy, an economist at Zillow Group.
Yet many economists say the rental market is likely to see more declines in the coming months. Prices typically dip during the fall and winter. CoStar predicts that by the end of September, rent will have declined for the second straight month.
Other analysts said they expect rents to decline on a monthly basis or remain flat through at least the end of this year. That would stand in contrast to the same period in 2021, when rents continued to climb.
Rent growth climbed quickly to records over the past two years, a streak some analysts have attributed to an explosion of pent-up apartment demand caused by early pandemic lockdowns. The boom in home-sale prices, which priced some people out of buying, also boosted rental demand.
Now, rent is moderating for a combination of factors, analysts said, including an increase in new apartment construction along with weakening consumer sentiment that might be discouraging people from signing more expensive apartment leases."
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