The pace of rising rents is slowing in many of the priciest markets and is now spreading to other parts of the country. That’s good news for renters, especially those who are looking to save more to buy a house one day.
Rents nudged up by 0.4 percent from February to March, according to data from Apartment List. Data from Abodo shows rents increased only 0.2 percent on one-bedroom apartments from March to April.
“There’s a large number of new apartment buildings and units which are now available,” says Sam Radbil, spokesman for Abodo. The added inventory “means prices are going to come down.”
There were about 285,000 more rental units available in 2016 than 2015.
“Oftentimes, trends like rent price decreases start on the coast or in the large markets, and those tend to trickle down,” Radbil says.
Rents in Silicon Valley’s San Jose, San Francisco, and New York are cooling slightly. Lower rents are now also being seen in the many Midwest and Rust Belt areas, notably Des Moines, Cleveland, and Kansas City, Kan.
In some high-priced markets, renters appear to be hitting the limit of what they’re willing to pay. Real estate pro Shahida Menjabeen with Keller Williams Bay Area Estates in Los Gatos, Calif., says more renters are becoming buyers or moving farther away from the priciest hubs to escape the higher rental costs.
“Two or three years ago, people were willing to pay anything to get into an apartment because there were a limited number,” Menjabeen says. “We already hit the threshold of what people are willing to pay for rents.”
For example, renters are moving from places like San Francisco and heading to Stockton, Calif., about 80 miles away. Median prices have risen in Stockton about 12.5 percent over the past year on two-bedroom apartments, according to Apartment List. Still, a median $1,000, two-bedroom apartment is still less than a quarter of what it would cost in San Francisco.
Also, more renters are leaving Seattle and heading to Tacoma, Wash., about an hour away, to find median rents about $1,000 cheaper. They’re also heading away from Dallas to Arlington, Texas, about 30 minutes away, where rent is about $750 less, according to Apartment List.