November Rents Tumble by Largest Annual Drop in Over Three Years
Average rents dropped by 2.1% from last year to $1,967 in November, according to a report from real estate firm Redfin released Wednesday. This represents the largest annual decrease since February 2020, reeling in from the rapid increase in rent costs seen in recent years.
Rental asking prices also dipped by 0.6% compared to October. It's crucial to note that these rent prices reflect the typical asking price for apartments available to new renters in the surveyed month, not the average rent paid by all renters.
Despite the decrease in rents, landlords continue to face challenges filling vacancies due to the influx of new dwelling units onto the market. Consequently, many landlords have been forced to trim rental rates and some have even introduced promotional offers like discounted months' rent or reduced parking fees to attract tenants, as noted in the report.
Redfin's chief economist, Daryl Fairweather, acknowledged the relief rent payers are experiencing. "Better deals are more readily available as landlords hesitate to make concessions and rental prices begin to sharply decline," Fairweather said. "More choices on the market mean renters have more excellent options to choose from."
The high property prices and rising mortgage rates have made the purchase of a home unattainable for many potential homebuyers, causing a shift towards rental living, said Fairweather.
The economic uncertainty and affordability issues, combined with the slower pace in household-building, inflation, and lower rental inventory, have contributed to the reduced rental prices, Fairweather added.
However, she noted that with declining house sale prices and mortgage rates, there might be more renters looking to transition into homeownership next year.
New Housing Construction Hits Record Levels
The total number of completed residential units in the U.S. increased by 7% from the previous year, reaching a seasonally-adjusted annual rate of 1.2 million units in the third quarter, according to data from the U.S. Census Bureau and the Department of Housing and Urban Development. While new housing construction has experienced a slight slowdown, the increased number of homes available means more choices for renters, resulting in higher vacancy rates.
With vacancy rates increasing, renters may find more available rental units. However, it's important to remember that local market conditions and factors such as job opportunities, population growth, and regional rental trends can vary significantly.
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