According to Realtor.com, rents fell in January for the sixth month in a row, with year-over-year prices down -0.3%, according to the monthly Rental Report. That’s providing some relief for renters, though prices remain higher than pre-pandemic levels amid strong demand and a limited supply of new units in many markets, including Denver.
In January, the median asking rent for 0-2 bedroom units in the 50 largest metros declined to $1,712, down $5 from the previous January and $46 below its August 2022 high. Following this trend, a recent Realtor.com® Avail Landlord & Renter Survey found that the percentage of landlords planning to raise rents in the next 12 months declined in recent quarters. Still, prices are 18.3% higher than they were four years ago. Median rents were mixed across unit sizes. Regionally, some big Western metro markets began to rebound while the supply of new multifamily housing units outstripped demand in the South, pushing down prices.
Big Western metros rebound
In January 2024, the median rent in the West fell by -0.3% from a year ago, led by declines in areas including Phoenix(-4.0%), Riverside, Calif. (-2.6%) and Las Vegas (-1.8%). But rents rebounded in some big metros, with Los Angeles (0.2%) and Seattle (1.3%) showing year-over-year increases following eight straight months of decline. According to the report, the median rent for a 0-2 bedroom in Denver/Aurora/Lakewood is $1922, a 0.3% increase YOY.
“Rental prices are declining, especially in places where new units are entering the market, but there’s still plenty of demand driven by the large population of renters, including potential first-time homebuyers who remain on the sidelines for now,” said Danielle Hale, chief economist at Realtor.com®. “Looking forward, Realtor.com® anticipates the rental market to decline only slightly in 2024, as an increase in the supply of new units is balanced out by continued enthusiasm for renting as a more affordable alternative to purchasing.”
Studios saw largest rent declines
The median asking rent for studios fell by -1.0% to $1,434, which is down -3.8% from its October 2022 peak but still 11.9% higher than four years ago. Asking rents for two-bedroom units declined by -0.6% to $1,892. Those larger units still saw the highest growth in rent prices over the past four years, with an increase of $321 (20.4%). Meanwhile, asking rents for one-bedroom units rebounded after declining since July 2023, increasing by 0.1% year over year to $1,591 in January. Demand for one-bedroom units may be fueled by the perception that they’re a sweet spot in the market: more spacious than a studio and more affordable than a two-bedroom unit.
With home prices still high and mortgage rates expected to remain elevated in the short term, many first-time buyers are choosing instead to rent. Rents are rising faster in big Northeastern metros such as New York (2.3%) and Boston (2.7%), where labor markets are strong and there’s slow growth in new housing stock, putting upward pressure on rents.
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