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By Suzanne Blake
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What's New
Several metropolitan areas saw significant drops in rent prices in November, according to a new report from Realtor.com.
Realtor's November 2024 Rental Report revealed the United States saw rent prices drop for the sixteenth month in a row in November.
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Why It Matters
The median asking rent in the 50 largest metros was $1,703 in November, down by $17 from September and $57 lower than its August 2022 peak.
But some cities had more noticeable rent declines than others.
What To Know
The top five metropolitan areas for rent drops year over year in November were Denver, Memphis, Nashville, Austin and San Francisco.
Denver saw prices decline by 6.7 percent year over year, while San Francisco rents dropped 4.5 percent as a result of reduced demand.
Following, also in the top 10, were cities like Dallas, San Diego, Phoenix, Birmingham and San Antonio, with rent drops of 3.5 percent or more.
Smaller-sized units saw greater drops in rent, with studios down 1.6 percent while two-bedroom apartments saw a lower 1.1 percent decline.
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What People Are Saying
Alex Beene, a financial literacy instructor for the University of Tennessee at Martin, told Newsweek that certain cities, like Nashville and Dallas, saw their populations skyrocket during the pandemic, but now there are fewer people moving in, sparking the rent declines.
"There's also certain markets dealing with an exodus - like San Diego and San Francisco - as residents continue to flee to more affordable states," Beene told Newsweek.
"Ultimately, it's hard to get too excited about these declines, as most aren't substantial, and middle class workers are still having a hard time being able to afford these rents even at lesser rates. It is still a hopeful sign that rent in some markets for the time being has peaked."
Title and escrow expert Alan Chang told Newsweek: Multi-family housing projects that started two to three years ago in high-demand areas are also now hitting the market, helping to ease rent prices.
"Building new housing units typically takes years due to planning, permitting, and logistical concerns," Chang told Newsweek. "As supply meets demand levels, costs will continue to ease in the near future."
Despite the modest improvements in rent prices for Americans, rent prices are still high compared to past decades due to inflation.
Kevin Thompson, a finance expert and the founder and CEO of 9i Capital Group, told Newsweek: "Often, it takes two incomes to afford rent, as available work hours may not support the demands, and overtime is typically not an option,"
While the initial rent spikes in many of the cities listed were due to rapid population growth, the housing supply is now increasing to meet that demand.
"As new construction increased in places like Austin, prices have started to decline," Thompson said. "That said, rent reductions are happening slowly. Prices tend to rise much faster than they fall."
What's Next
Moving into 2025, renters should expect a gradual adjustment in prices.
"With construction slowing, significant price relief is unlikely in the near term," Thompson said. "It will take time before rents decline enough to meaningfully reduce the financial burden of long work hours."
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