Rental affordability is showing signs of improvement across the United States, thanks to a surge in apartment construction during the pandemic. As of December, the median asking rent price nationwide stood at $1,695. This figure represents a slight decrease of 0.5%, or $8, from November. The trend signifies a newfound opportunity for renters, who are now gaining more negotiating power over their leases.
The construction boom has been a significant factor in this shift. New apartment buildings have been popping up in certain areas more than others, leading to a faster decline in rent prices in those regions. In Austin, for instance, rents are expected to continue falling as the supply of new apartments grows and demand balances out. The median rent in Austin was reported to be $1,394 in December.
The availability of newly built apartments is largely concentrated in specific areas, creating a more favorable market for renters there. Many of these new units are from projects initiated in 2021 and 2022, and they continue to come online, further impacting rental prices.
Renters should leverage this situation to their advantage. With more options available, they hold increased negotiating power when discussing lease terms. As one expert noted:
"If your property manager is trying to raise your rent, you can come to them with information to show them that your rent shouldn't be increased."
In some markets, rents may even decrease further, providing an even better bargaining position for tenants.
"In some markets, it should even go down."
Furthermore, with the latest average rent price being 1.1% lower than a year ago and down 3.7% from the peak highs in July 2022, renters are encouraged to compare neighborhood rental rates to strengthen their negotiations with landlords or property managers.
Austin serves as a prime example where supply and demand dynamics are playing out favorably for renters. Joel Berner, a senior economist at Realtor.com, suggests considering alternative living arrangements:
"You can find a pretty good deal on maybe a three-bedroom apartment and split it with other folks."
This strategy can be particularly beneficial in areas where rent remains relatively high despite the broader trends.
Daryl Fairweather, chief economist at Redfin, has dubbed the current environment a "renter's market," projecting that these conditions will persist throughout the next year.
"We're calling it a renter's market. We think that's going to continue for the next year."
Despite these promising developments for renters, it's important to remain cognizant of potential additional costs associated with renting. Fees for amenities such as parking garages, shared community spaces, on-site fitness centers, or bike storage can vary. Monthly fees might range from $30, while one-time charges can be as high as $200-$500.
Landlords face their own challenges in this evolving market. Tenant turnover can be costly, especially when properties remain unoccupied for extended periods. Thus, landlords may be more inclined to negotiate favorable terms to retain reliable tenants.