Rent Plummets in These 5 Cities

While many city residents continue to complain about skyrocketing rent prices, five metropolitan areas saw rent come down significantly over the past year, according to a new Realtor.com report.

Monthly rent decreased the most in Orlando, Florida (6 percent); Portland, Oregon (5.5 percent); Austin, Texas (5.4 percent); and Dallas, Texas, and Riverside, California, (both 4.1 percent) the report found.

A one-bedroom house is listed for just $700 in Orlando, Realtor.com data shows. In Portland, a house to rent at the lowest end goes between $585 and $980.

In Dallas, renters can expect homes to be priced as low as $550 monthly. In Austin, the price of a rented apartment was listed as low as $490, while Riverside residents could rent a three-bedroom home for $800.

After those five cities, Los Angeles saw a drop of 3.8 percent year over year in November. The lowest cost for a studio in the city was $595, according to Realtor.com.

"It's good news for renters," Realtor.com economist Jiayi Xu said. "It should give people a sense of relief."

The dropping prices came in many Sun Belt cities as a prolonged correction of drastic pandemic-era price hikes, according to realtor analysts at Zumper.com.

"Migration to cities like Austin is slowing just as new supply is coming online in record numbers," Zumper CEO Anthemos Georgiades told Newsweek. "Occupancy rates are declining in these areas, and prices will continue to fall as operators make concessions in an attempt to fill new buildings.

Because many would-be renters cannot afford the rates, landlords are being forced to drop their prices in Orlando. The same is true for the other cities that experienced a significant drop in prices.

"People moved to beautiful, warmer places during the pandemic when they could work remotely," Xu said. "But now, as more people are asked to return to the office, they're going back to urban centers. So there's less demand in these rental markets."

Additionally, markets in the South and West saw more unemployment in 2023, leading to fewer residents able to afford the rent.

"There are more rental homes than new renters in these markets and landlords have had to reset prices lower to attract renters," Realtor.com chief economist Danielle Hale told Newsweek. "A look at regional labor markets shows that the South and West have tended to see greater upticks in the unemployment rate so far in 2023, which likely explains why demand isn't keeping pace with more robust supply growth in these regions."

Across the country, renters paid a median of $1,717 a month in the 50 biggest metropolitan areas in November. Overall, that was a $12 drop from October and $59 from the July peak.

For many Americans who have put off moves as they wait to see how the economy behaves, the rent reductions aren't yet enough to find a new place. Zumper said to expect the trend to continue through the first half of 2024, but much could change for their bargaining power next year.

"Those who do move into a new rental over the next six months will have more bargaining power than at any time in recent memory," Georgiades said. "Property owners and managers are feeling the pressure, especially to lease up new builds. They'll continue to offer concessions and move-in deals. Eventually, they'll have no choice but to cut asking rents."

The gradual decline doesn't mean renters aren't still paying massive amounts for their homes.

The Bureau of Labor Statistics found that the price index for shelter, which includes rent, "was the largest contributing factor for both the overall inflation increase and the core inflation increase" earlier this year.

Housing prices more broadly are expected to tumble in 2024, real estate experts at Realtor previously said.

Of the metros analyzed, Austin, was expected to see the biggest drop in home prices, with a 12.2 percent decrease anticipated. St. Louis, Missouri, on the other hand, has an estimated home price drop of 11.7 percent coming, while Washington state's housing prices are set to decline by 10.2 percent in 2024, according to Realtor.com.

However, this change could lead to a "lock-in effect," where existing homeowners, who already have lower mortgage rates, don't want to sell, creating a low supply of homes for sale.

The median home price in the U.S. as of the third quarter was $431,000, according to the Federal Reserve Bank of St. Louis, but next year an anticipated 1.7 percent dip in value would make a median-sized home priced at $423,673 next year.

Still, some cities saw an uptick in rent prices, including Boston, which rose by 6.1 percent in November. In New York City, rental prices climbed by 5.6 percent, while Milwaukee, Richmond, Louisville and Washington, D.C., all had surges.