The housing market's biggest shocker: Your rent may actually fall this year
in high-profile industries. Wage growth is strong, and people have plenty of savings. Yet property managers are having a harder time getting new renters through the front door. The national vacancy rate for apartments jumped to 5% in December, up from a record seasonal low of 2.5% the year prior, according toMost housing economists blame the pullback in rental demand on worries about the future.
A dramatic uptick in new supply over the next couple of years is poised to exacerbate the headaches for landlords and open up more opportunities for renters. More than 971,000 apartment units were under construction across the US at the end of 2022, the second-largest number on record. About 575,000 multifamily units are scheduled to be completed this year, RealPage reported.
Parsons expects to see more markets where rents fall year over year, he told me, especially high-rent downtown areas where a lot of supply will be coming online."We've already heard anecdotally that some renters are seeing even rent reductions on renewals," Parsons told me."I don't think that's going to happen across the board for everybody. But you're going to see pockets where you're seeing more of that.
While local markets face their own ups and downs, it takes a lot for rents to fall nationwide on an annual basis. Unlike for-sale housing, the rental market has been remarkably immune to significant price declines in the past, even during rocky periods for the economy. In the aftermath of the Great Recession, for example, the consumer price index for rentonly for a brief period before continuing its march upward. People may cut back on other expenses, but they still need a place to live.
"A lot of people talk about, 'Well, rents have hit a ceiling. There's only so much people are willing to pay,'" said Jon Leckie, a researcher for Rent, a platform that helps landlords market their properties."The way I look at it is we've set a new floor."
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