Rent levels dropped in September for the first time in six months

2023 September, saw very welcome relief to US tenants, as levels fell for the first time in six months, whereas in August, they had come to within $2 of an all-time high.  

This has nevertheless, brought the monthly median down to US$ 2011: a saving of $40 a month.  Whilst this is still the lowest for several months it still, however, reflects a year-on-year increase of $8 a month but, notwithstanding this, falls in rent are always good for renters.

Recent trends are perhaps an indicator that a degree of seasonal normality is returning to the rental market.  Patterns of rent had shifted away from the usual trend of a fall in the autumn/winter months and a rise in spring/summer seasons recently – with slow but sustained rising rents over the years.   This averaged around 11% in 2022, however, in September of that year rents peaked at about US$ 2,054 before falling back somewhat.   One of the factors driving the increase was the Covid pandemic which distorted the market greatly as patterns of work and life changed and which took some time for its effects to percolate through. This forced prices up by about 25%.  The second factor was an across-the-board fall in demand: which clearly helps rents to fall as the market moves to stabilise supply and demand.

Regional variations

Trends, of course, vary by region and even more so within the region, reflecting demographics and different demand, but broadly speaking, the Midwest had the highest increase at 5%, but, nevertheless, rents were still slightly less than in the South; and very much lower (by US$1,000 a month) in the North-west – where they actually rose by 3%, and in the North-east, where rents are actually declining (by just under 2% over the last year).  Prices in the South, though, were more or less static.

Micro level variations

Breaking it down state-by-state reveals some interesting discrepancies and variations.  Although roughly two thirds of rents rose over the year: more recently this trend has been reversed with just over 70% of states recording drops between August and September and, thus, feeding into the macrolevel decline seen.  Some examples include Florida dropping by 3%, and California, New York, Massachusetts, Idaho, Arkansas and Tennessee all falling by around 2%.

Averages, however always hide reality and, as we all know, a statistician is someone with his head in an oven, his feet in the freezer, but on average he says he is fine.

The Midwest bucked this general trend of rent falls with the majority of states situated there experiencing an increase in rents.  For example Iowa, in particular, reported a jump of more than 12%.  South Dakota and North Dakota saw 11.3% and 9.5% increases respectively whilst Mississippi, in the South, was the exception to that area’s general decline with a whopping 16% rise.

Metro

Metro areas largely reflected the general trends with the Midwest rising and South and West metros falling.  For example, Columbus, Ohio Metro soared over 14% to US$1,780, but was still well below the national median; and similarly, although Kansas City and St. Louis rose by some 8% they too remain at the lower end of rent cost at about $1,700, along with Buffalo, New York.

New York Metro, as expected, is consistently the most expensive area in the USA: reflecting the huge demand there and, although rents went up by 6.5%, a small rise, this brought the median to a staggering US$4,450 a month. In the South metros posted small rises of some 8% – but contrasting with the West where declines were seen: including Las Vegas and Portland Ohio at around 12%; and Sacramento and Salt Lake City which had more gentle falls of  7%, and just over 6% respectively.

What does this mean?

Well: if you are a renter then generally this is good news, especially in those areas experiencing major falls, however, in areas such as New York there is no relief in sight: so perhaps it’s time to change locations and major on remote working?