Rent Prices Are Down, Not Out

By: James Flippin · March 16, 2023 · Reading Time: 3 minutes

Rental Data

After a year or so of soaring rent prices, tenants are finally seeing slight price relief.

In January, the median rent sat at $1,942, down slightly from a peak of $2,053 last August. This median was notably just 2.4% higher than a year earlier. Some renters view this as a sign that the months of double-digit percentage increases could be in the rearview.

Nevertheless, sky-high rent remains a significant challenge for many Americans.

What’s Going On?

There are a couple potential reasons why rent prices are slowing across the nation.

The first reason is likely due to a snowball effect from a general sense of economic uncertainty. With recessionary concerns top of mind for many consumers, renters may be less inclined to embark on a move until their financial future becomes more clear. This is one factor contributing to lower demand for housing which, in turn, has helped to ease rent increases.

At the same time, more apartment complexes — many of which began construction in a stronger market — are now becoming available. This gives tenants more options to choose from, putting pressure on landlords to offer more competitive pricing.

Minding the Gap

As the gap between rent growth and income growth in America widens, rent rates are increasing faster than the average renter’s income.

While rent price hikes have eased over the past months, experts don’t expect a sharp decrease in prices any time soon. This is likely because higher interest rates are forcing would-be homebuyers to stay in the rental market longer.

As a general rule, rent payment should not exceed 30% of your monthly income. If you find yourself paying more and feeling cost burdened by rent, it could be time to consider a new living arrangement or relocation to a less expensive area. Fortunately, more options are becoming available every day — and they may just be more affordable now than when you last checked.

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