Rental price increases are showing signs of slowing down in some of the country's most expensive markets. The news will be a welcome respite for many renters, especially those who're struggling to save up to buy their own home.
According to new data from Apartment List, rental prices rose by just 0.4 percent in February to March. Meanwhile, data from Abodo shows that rental prices for one bedroom apartments increased by just 0.2 percent from March to April.
“There’s a large number of new apartment buildings and units which are now available,” said Sam Radbil, spokesman for Abodo. He explained that the rise in available inventory “means prices are going to come down.”
Abodo's data shows there are around 285,000 more single-bedroom rental units available in the U.S. than there were one year ago.
“Oftentimes, trends like rent price decreases start on the coast or in the large markets, and those tend to trickle down,” Radbil continued.
Some of the hottest rental markets, including San Jose in Silicon Valley, San Francisco and New York, are finally cooling down, the data suggests. In addition, rental costs are decreasing in many Midwest and Rust Belt areas, such as Cleveland, Des Moines and Kansas City.
Apartment List goes further and says that rental costs in many markets appear to have hit the limit of what renters can afford to pay. Shahida Menjabeen, a real estate agent with Keller Williams Bay Area Estates in Los Gatos, Calif., said increasing numbers of renters are becoming buyers, or otherwise moving to cheaper areas to avoid paying such high rents.
“Two or three years ago, people were willing to pay anything to get into an apartment because there were a limited number,” Menjabeen explained. “We already hit the threshold of what people are willing to pay for rents.”
Menjabeen says renters are deserting cities like San Francisco in their droves, moving to cheaper areas such as Stockton, Calif., which is around 80 miles away. While median rental prices in Stockton have risen by around 12.5 percent over the last year, a median two bedroom apartment in the city still costs only around 25 percent of a similar apartment in San Francisco.
Another hot rental market that's seeing people leave is Seattle, where many residents are heading to cheaper Tacoma, which is about one hour's drive away. There, rents are about $1,000 per month cheaper on average. Other cities seeing renters leave include Dallas, where many residents are moving to Arlington, around 20 minutes away, in order to take advantage of rental prices that are around $750 per month cheaper, Apartment List said.