Is the Rent Too High? Renters May Be in Luck in These Cities
Is the Rent Too High? Renters May Be in Luck in These Cities
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It might seem like the cost of just about everything, from train fares to interest rates, is going up these days. And yet the pace of rising rents, one of every tenant’s worst fears, is actually slowing down in many of the nation’s most expensive cities.
The slowdown can be seen nationwide, according to a pair of recently released reports from two rental websites. Rents rose only 0.4% from February to March, according to Apartment List. Meanwhile, they rose 0.2% on one-bedroom apartments from March to April, according to Abodo.
And those monthly bills are continuing to fall in such pricey metros as Silicon Valley’s San Jose and San Francisco, and New York City, even if it’s just a fraction of a percentage point. Hey, every little bit helps those cash-strapped tenants gleaning change from their couch cushions.
Why rents are flat—and going down in some cities
“There’s a large number of new apartment buildings and units which are now available,” says Abodo spokesman Sam Radbil. And with all those available units vying to lure residents, “that means prices are going to come down.”
Prices in the most expensive cities already began coming down in the second half of 2016, he says. That’s because there were about 285,000 more rental units available in 2016 than 2015. And now lower rents are spreading to cheaper areas in the Midwest and the Rust Belt, including Des Moines, IA; Cleveland; and Kansas City, KS.
“Oftentimes, trends like rent price decreases start on the coast or in the large markets, and those tend to trickle down,” he says.
Meanwhile, the cities seeing some of the largest bumps are located right outside even more expensive metros, according to Apartment List.
Many Silicon Valley renters are getting so sick of the sky-high costs of leasing an apartment that they’re becoming buyers, says Silicon Valley–area Realtor® Shahida Mehjabeen of Keller Williams Bay Area Estates in Los Gatos, CA. Or they’re moving farther away from the more expensive hubs.
“Two or three years ago, people were willing to pay anything to get into an apartment because there were a limited number,” she says. But “we already hit the threshold of what people are willing to pay for rents.”
The new hot spots for rising rents
Renters are now likely being priced out of places like San Francisco and are turning to places like Stockton, CA, about 80 miles away. Median prices have shot up in Stockton about 12.5% over the past year on two-bedroom apartments in the city, according to Apartment List. That might sound like a lot, but at a median $1,000 for a two-bedroom apartment, tenants are still paying less than a quarter of what they would in San Francisco.
Renters are also moving from Seattle to Tacoma, WA, about an hour away, where prices rose 10.2%, and from Dallas to Arlington, TX, just 30 minutes away, where prices went up 9.5%. Median rents are about $1,000 higher in Seattle than Tacoma and about $750 higher in Dallas than Arlington, according to Apartment List.
“The fact that people are having to move farther out and have longer commutes points to the issue of a lack of affordability in some of these bigger cities,” says Apartment List data analyst Chris Salviati. And unfortunately for renters who tend not to be bringing home a huge paycheck, “it seems likely that it’s a trend that will continue going forward.”
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