Cheap rent alert: Rental prices are continuing to come down, particularly in the South.
Across the country, rents fell in 29 of the 50 largest metropolitan areas in February, according to a recent Realtor.com® report. That’s been a boon for tenants, many of whom saw big run-ups in prices over the past few years.
“We’re seeing a lot of new [apartment] construction in the Southern region. More construction means more new supply, which means lower prices,” says Realtor.com economist Jiayi Xu. “That means [tenants] have more money for other parts of their lives, not just housing costs.”
The Memphis, TN, metropolitan area, which has been popular with investors buying homes to flip as well as turn into rentals, experienced the largest price cuts. Rents decreased 5% year over year in February, to a median of $1,251 a month.
“We are seeing properties not rent as fast,” says Pablo Pereyra, the principal broker for 901 REALTORS in Memphis.
He attributes some of that to the housing market balancing out and notes that “our rental prices are some of the lowest costs” of the nation’s large metros.
Memphis was followed by Austin, TX, where rents dropped 4.4%.
Austin-based real estate broker Brad Pauly attributes the dip to new apartments coming online. This might force some landlords to compete for tenants.
“There have been a lot of apartments built in the last couple of years with more on the horizon. There were a lot of properties purchased in the last few years purely for rentals, which added to a lot of new inventory to the rental market,” says Pauly, of Pauly Presley Realty.
Austin is “still a destination and a hot spot to live in,” he adds. “But the [population] growth has slowed.”
Meanwhile, rental prices rose in just 16 markets. (There wasn’t adequate data for five of the 50 largest markets.)
The New York City metro experienced the biggest rent hike with prices rising 5.4% year over year in February. Tenants forked over a median of $2,852 a month, according to Realtor.com.
“There is not a lot of available land to build new rentals on in New York City,” Xu points out. “The for-sale markets may be really expensive there, so people tend to stay in their rental properties longer. [This] pushes up demand, which pushes up prices.”
The report looked at listing rents for studios as well as one-bedroom and two-bedroom apartments, condos, townhomes, and single-family homes in the 50 largest metros. (Metros include the main city and surrounding towns, suburbs, and smaller urban areas.)
Where rents fell the most in February
Median rental price in February: $1,251
Median price drop year over year: -5%
Median rental price in February: $1,530
Median price drop year over year: -4.4%
Median rental price in February: $1,613
Median price drop year over year: -4.1%
Median rental price in February: $1,589
Median price drop year over year: -4.1%
Median rental price in February: $1,300
Median price drop year over year: -3.9%
Where rents rose the most in February
Median rental price in February: $2,852
Median price drop year over year: 5.4%
Median rental price in February: $1,825
Median price drop year over year: 3.7%
Median rental price in February: $1,297
Median price drop year over year: 3.6%
Median rental price in February: $2,895
Median price drop year over year: 3.1%
Median rental price in February: $1,319
Median price drop year over year: 3.7%