Are things getting better for apartment renters?

See Renters Are About to Get the Upper Hand: New-lease rents are poised to fall on an annual basis for only the second time since 2008 financial crisis by Will Parker of The WSJ. Excerpts:

"The average of six national rental-price measures from rental-listing and property data companies shows new-lease asking rents rose just under 2% over the 12 months ending in May. 

That is down from the double-digit increases of a year ago and represents the largest deceleration over any year in recent history"

"An annual decline would offer relief for millions of renters who have had to contend with rents that rose 25% nationally over less than two years."

"One of the rent measures, from real-estate brokerage Redfin, already shows asking rents turning negative with a decline of 0.6% in May, compared with the same month last year. The data includes both apartments and single-family rental homes, Redfin said.

A decline in asking rent over a 12-month period has only happened one other time since the 2008 financial crisis, according to some data sources, when the rental market briefly dipped in 2020 because of the outbreak of Covid-19, ending a decadelong streak of rent increases." 

"A historic number of new apartments under construction is also forcing more competition among landlords. That will help slow down rents in some parts of the country, such as the South and Southwest, which are seeing the most construction, housing analysts said. [If prices rise in a competitive market, then more sellers will enter if there were above average rates of return-this increase in supply (a rightward shift of supply) would lower prices]

“There’s certainly a correction taking place,” said Rob Warnock, a researcher at rental website Apartment List. Apartment List reported rents rising under 1 percentage point for the year ending in May."

"new-lease rents, which measure the change in price for apartments available to be leased to new tenants, are considered more of a leading indicator. As new-lease rent prices cool, landlords also are expected to keep dropping how much they ask their existing tenants to pay"

"Property owners who don’t lower renewal rates risk watching too many of their tenants move out"

"The increases tenants pay to renew existing leases are also going down this year. The typical renter living in a professionally managed apartment building paid 6.5% more to renew their lease in May, according to RealPage. That figure has been falling for 10 months and is down from a peak rate of 11%."

At one point the article also said "high prices started to weaken demand from renters in the second half of 2022." If supply had decreased (which causes price to rise), then quantity demanded would fall, not demand. Price is not a shift factor for demand.

Related posts:

Apartment Rents Fall as Crush of New Supply Hits Market (2023)

First Annual Drop in Rents Since Pandemic Began, Redfin Says (2023)

The Law of Supply Seems to Be Working in the San Antonio Apartment Market (2023)

Home sale prices, apartment demand and the price of subsitutes (2022)

Increased Supply Is Holding Down Rent Increases (2018) 

Rents are relatively low in San Antonio (2018)

People leaving costly cities while rent falls in other cities due to rising supply (2016)