Rents were down in 90 of the nation’s 100 largest cities in December of 2022, Apartment List reports in January.
In December, national rents declined by 0.8 percent for the fourth straight month.
“We expect that 2023 will see bargaining power shift back to renters, and that rent prices this year will grow only modestly, if at all,” the Apartment List research team writes.
There has been a geographical spread of the recent slowdown. Ninety-five of the nation’s 100 largest cities reported a decrease in rents in December. In New York City, prices fell by 3 percent month-over-month, the steepest decline in the nation.
On a longer horizon, we are continuing to see a slowdown in many of the recently booming Sun Belt markets. Since March 2020, Las Vegas, Phoenix, Jacksonville, and Riverside all rank among the top 10 metros for rent growth, but none have seen rents increase by more than 1 percent.
Vacancy rate continues to rise
As rent growth cools, supply is continuing to ease.
After more than a year of gradual increases from a low of 4.1 percent last fall, our vacancy index now stands at 5.9 percent. After plateauing somewhat over the summer, this easing of the vacancy rate has picked up again over the past four months.
According to the report, the vacancy rate today is slightly below the pre-pandemic norm, but it is rapidly approaching it.
In December 2022, the vacancy rate reached 5.9 percent, an increase of 0.8 percentage points from August through November.
Due to skyrocketing rents and rising non-housing-related costs due to broad-based inflation, some Americans are moving back in with their families or roommates, or delaying living on their own. A new apartment construction boom is also underway after pandemic-related delays in recent years,” the report says.
We will likely see a seasonal dip in Denver and the surrounding areas too in rent growth through the winter, but we will likely see positive rent growth in the spring and summer. According to the report, 2023 is expected to be a year of modest rent growth, but prices are unlikely to fall significantly.