Analysis: The free market achieves what rent control can't (that is, lowering rent)

San Jose's rent growth, at 1.7%/yr, has slowed down significantly since Covid. And it's not the only city seeing a downward trend in median apartment rent due to increased housing supply and weakened tenant demand, concocting an unusually competitive landscape for landlords. The WSJ's Will Parker breaks down how 2023's turn in the market is forcing property managers to more affordably list apartments.

Apartment rent growth is declining fast, shifting the rental market to the tenant’s favor for the first time in years.

The average of six national rental-price measures from rental-listing and property data companies shows new-lease asking rents rose just under 2% over the 12 months ending in May.

That is down from the double-digit increases of a year ago and represents the largest deceleration over any year in recent history, according to data firm CoStar Group and rental software company RealPage....

The U.S. rental market is slowing down after an unprecedented run. In some markets, such as Miami and Riverside, Calif., monthly rents are up 35% or more over the past three years. But the high prices started to weaken demand from renters in the second half of 2022, many of whom were pushed to their financial limits by higher rents. Some are moving back in with parents, taking on roommates or relocating to cheaper cities.

A historic number of new apartments under construction is also forcing more competition among landlords. That will help slow down rents in some parts of the country, such as the South and Southwest, which are seeing the most construction, housing analysts said.

“There’s certainly a correction taking place,” said Rob Warnock, a researcher at rental website Apartment List.

This article originally appeared in the Wall Street Journal. Read the whole thing here.

Read more about how SJ’s rent control policies backfire here and here.

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Image by Ivan Samkov