Renters might be relieved to hear that rents are growing at the slowest pace since the COVID-19 pandemic, with the median prices in the 50 largest cities coming in at $1,734 for April.
That sum is up $4 from last month—but down a whopping $43 from last year’s peak, according to the Realtor.com® April Rental Report.
What’s more, economists predict the trend is likely to continue.
“The big takeaway from this report is that the yearly gain dropped below 1%,” says Jiayi Xu with the Realtor.com economics team. “I believe we are going to see year-over-year declines, which is really good for renters. Maybe not next month, but very soon.”
Why rents may drop ‘very soon’
One of the biggest factors affecting the rental market is the increased supply of newly constructed apartments. This gives renters more leeway to bypass less desirable rentals, which are sitting empty in record numbers.
“The vacancy rate of 6.4% is the highest in two years,” Xu points out. “That means there are more options.”
Still, the rental market continues to be plagued by high prices. Also, rent has been gaining faster in smaller units and in areas of the country that are more affordable than the pricey coasts and Sun Belt.
The Cincinnati metro, where the median apartment cost $1,218, saw the sharpest price gain in April, with rents up 9.9% compared with a year ago. Detroit, where the median rent is $1,390, was in second place, with an 8.9% gain.
In contrast, some of the hottest pandemic destinations saw the biggest reversals. Riverside, CA, saw rents fall 10.9% in April versus a year ago, resulting in a median rental cost of $2,123. And in Las Vegas, the median lease was 5.7% lower than in 2022, settling at a mere $1,509.
How to find a cheap rental right now
But tenants in search of their next home shouldn’t take anything for granted. The best approach for renters with some flexibility is to consider not just prices, but also vacancy rates, local unemployment rates, and population growth, says Brian Davis, who teaches real estate investment courses at SparkRental.
“Ideally, you want a city with low unemployment but also slow and steady population growth, rather than either explosive growth or a declining population,” Davis suggests. “Cities with exploding populations see rent prices soar and vacancy rates crater.”
Some solid options from among the Realtor.com top 50 metros in April include Kansas City, MO, where the median rent is $1,282, up a reasonable 3.5% compared with a year ago, and where the vacancy rate is 8.7%. Labor Department data shows that the unemployment rate there is just 2.7%, below the national average.
It’s a similar story in Nashville, TN, where the jobless rate is 2.5%, the median rent is $1,599, and the vacancy rate is 9.9%.
It pays to do your homework, with Davis pointing out, “Real estate markets nationwide are extremely uneven right now.”
Source: realtor.com