Across the nation, rent prices fell 0.2 percent last month, representing the country’s first measurable price decline since 2020 rent growth records, according to the January report from Apartment List.
Last year was a period of tremendous rent growth, with prices rising nearly 18 percent in less than a year, so while prices remain high they may have turned a corner.
Apartment List economists Chris Salviati, Igor Popov, Rob Warnock, and Lilla Szini write that, “Sixty-one of the nation’s 100 largest cities saw rents fall this month, indicating a widespread rental market cooldown.
“In particular, Seattle and San Francisco both landed in the top five for largest month-over-month declines, signaling that these pricey tech hubs may be entering a second phase of COVID-related rental market softness. More broadly, our national vacancy index ticked up again for the fourth straight month, as we enter 2022 amid an easing of the tight market conditions that characterized 2021.”
While this is the time of year to see typical rent growth slowing, the report says the current slowdown is coming after 2021’s unprecedented price increases.
For example, in December of 2021 rent growth fell in line with pre-pandemic trends – rents also fell by 0.3 percent in December 2019, and by 0.2 percent in December 2018.
The Vacancy Index Is Trending Up
After bottoming out at 3.8 percent in August 2021, Apartment List writes, “Our vacancy index has ticked up slightly for four consecutive months and stands at 4.3 percent at the end of the year.
“Although the recent vacancy increase has been modest and gradual, it represents an important inflection point, signaling that tightness in the rental market is finally beginning to ease.
“If our vacancy rate continues this trend in the coming months, it’s likely that rent growth will also continue to cool.”
Affordability Still an Issue In Rent Prices
The report says it’s important to bear in mind just how much affordability has dissipated in 2021; 99 of the nation’s 100 largest cities saw rents jump more than 10 percent over the year, and the national median apartment cost eclipsed $1,300 for the first time ever. So despite a recent cool-down, many American renters will remain burdened throughout 2022 by historically high housing costs.