(Bloomberg)—The rental market in some of the hottest U.S. cities is showing early signs of cooling down.
After surging 11.4% over the past 12 months, the median national rent for a one-bedroom apartment rose just 0.5% in June compared to a month earlier, while the median two-bedroom rent fell 2.9%, according to data from rental marketplace Zumper.
The decline in prices for two-bedrooms is the “most significant drop we’ve seen since pre-pandemic times,” according to Crystal Chen, a spokeswoman for Zumper. “Renters are sending a clear message to property owners that they’re not able to pay sky-high rents, and they anticipate a recession.”
Rents typically peak during the summer months, but surging inflation and talk of a recession are causing Americans to tighten their belts and reconsider their living arrangements, whether it’s moving in with roommates or sacrificing on space and location. Rising mortgage rates are also forcing some home sellers to slash their listing prices, creating “pockets of opportunity for renters who’ve been looking to buy a home for years” and likely contributing to the drop for two-bedroom apartments, Zumper said.
The month-over-month declines in rent were most dramatic in some of the Sun Belt cities that saw the sharpest gains over the past couple of years. In Miami, which attracted an inflow of remote workers from cities such as New York during the pandemic, two-bedroom median rents fell 6%. San Diego’s median one- and two-bedroom median rent prices both fell 6.1%, and Fort Lauderdale, Florida saw rent decline by nearly 6% for both apartment sizes.
New York City continues to be the most expensive place for renters, with one-bedrooms costing a full $600 more per month than the second-most expensive city, San Francisco. New York renters may find it comforting that the price for one-bedroom apartments rose just 0.3% in June compared to May, but that was still up 40% year-over-year.
Renters can expect a continued cooldown in apartment prices over the next several months, but not a complete downturn, Chen said.
“We likely won’t see a significant decrease in prices since we’re still facing a housing shortage and the labor market remains strong,” she said.
To contact the author of this story: Paulina Cachero in New York at [email protected].
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