While much of the country is still seeing a surprisingly competitive real estate market, certain areas in the United States are experiencing a relative cool down when it comes to rental prices. According to a new report from Realtor.com, there are a few areas where the average rental price has dropped over the past year.
What's most shocking about these findings is that some of these properties are located in the once red-hot markets that have been steadily rising for years. We talked to some local pros to find out why they think the median rents are going down in their neighborhoods and why now may be the perfect time to make the plunge and relocate.
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1. Los Angeles, California
LA is an area where many people have found themselves completely priced out of the rental market over the past few years. While prices still remain higher than the national average ($2,781 vs. $1,702, according to RentCafe), renters are now seeing those numbers come down about 0.8 percent, according to the new report.
Real estate broker Suekay Deniz says there can be various factors contributing to driving down prices, such as changes in supply and demand dynamics as well as economic conditions. "In addition, there are still a lot of remote jobs, making [it] easier for people to live in their optimal desired area."
That means many people can now afford to leave expensive areas, like LA, for more affordable places, causing landlords and property management companies to cut prices in order to entice potential renters.
Las Vegas, Nevada
Desert lovers may be able to find themselves a new pad at a lower rate in Sin City. Rentals in this area dropped 4.3 percent in March. The report does note that while rental properties located in the Sun Belt markets have cooled and seen prices drop quicker than in many other areas, the median rent is still 27.2 percent (or approximately $408) higher than it was before the pandemic.
2. San Francisco, California
It may be hard to believe that San Francisco has made this list, but according to Realtor.com, the Golden City saw a 0.8 percent drop in rental prices as of March 2023. Not only is this drop in price surprising but it marks the first decline of its kind in more than two years!
That's allowing people to take advantage of some major perks. "Lower rental costs can make living in a desirable area more financially feasible, enabling you to access amenities, services, and opportunities that may have been previously out of reach," Deniz says. San Francisco has all of that (and more) to offer, making this news especially good for people who have been wanting to make a move.
3. Tampa, Florida
If you're looking for Southern living on a budget, Tampa, Florida, may be your best bet. Rentals went down 2.7 percent in March, giving people in the Sunshine State something to smile about. Renters in Tampa will get to experience a close proximity to beaches, urban areas, and more rural settings all while taking advantage of that near year-round sunshine Florida is so famous for.
Additionally, the job market in Tampa is looking solid with a 2.5 percent unemployment rate, which Axios reports is one of the lowest out of all the large metro areas in the U.S.
4. San Diego, California
While San Diego did experience a rental price bump in March, it looks like that hike was still lower than what we've seen at national levels. San Diego renters only saw a 2 percent hike in their monthly payment, while nationally, renters in the top 50 cities surveyed by Realtor.com found themselves forking over 2.5 percent more on average.
San Diego-based Leonard Ang, CEO of iPropertyManagement — an online resource guide for landlords, tenants, and real estate investors — says he's personally noticed the decreased rental prices in his area. "There are a few factors driving outmigration from these big SoCal cities. First of all, rents and real estate prices have been high here for a long time, and this fact has made national news on more than one occasion," he explains, adding that some people may be looking for more affordable options elsewhere, creating a vacuum in the rental market in the process.
5. San Jose, California
People who have been hoping to find a new rental in San Jose may be in luck. In March, rental prices went up 4.5 percent, a number that is just a fourth of what it was at the same time in 2022, causing some pros to speculate that prices will continue to make a steady decline over the next few months.
Those numbers may not seem all that impactful at first glance; however, these figures mean renters in the area can now likely get much more bang for their buck. "Lower rental prices mean you can potentially secure a larger or better-quality property for the same budget, allowing you to get more value for your money," Deniz explains.
6. Riverside, California
Another California town that has seen prices go down is Riverside. The cost for a two-bedroom rental property in this area dropped 5.3 percent. This could be the result of the highly inflated real estate prices Ang mentioned before or something else altogether. "We've also got more than our share of natural disasters in California, from flooding to drought to wildfires to earthquakes, and this is another big push factor for people looking to move elsewhere," he continued.
That being said, anyone who moves to Riverside will get a chance to take advantage of the prime Southern California real estate, which has the city smack dab between the beaches and the mountains, giving outdoorsy renters the best of both worlds.
7. Phoenix, Arizona
Another Sun Belt city that has seen rental prices come down is Phoenix. Renters were able to find new digs for 4.7 percent less than they were able to in years prior.
One local PBS station reported in 2022 that Phoenix once led the pack when it came to cities with record-high rental increases. Now, it seems like it's about to once again take the lead in the nation, but this time bolstering a fall in prices. Hopefully, this helps make the fifth-largest city in the U.S. more affordable for those who have been hoping to take advantage of some of what Phoenix has to offer, including the amazing golf courses (hello, TPC Scottsdale) and luxury resorts.
8. Austin, Texas
There's no shortage of people looking to move to the Lone Star State thanks to a hopping job market, but now it may be a bit more affordable to find a new place to call home in Austin since rent prices went down 2.5 percent as of March. That's big news for many people who have been priced out of the city when you consider the fact that Austin was ranked number one on a recent Realtor.com list of U.S. cities where it's cheaper to rent than own.