“Rent Check” takes a snapshot of the financial challenges tenants face in California’s tough rental market.
Buzz: Rents fell for the second consecutive month in October with apartment prices dropping in 89% of major cities across the state.
Source: My trusty spreadsheet looked at ApartmentList’s monthly rent estimates for October for 44 major California cities. To estimate what tenants are paying, this rental tracker examines their online listings as well as landlord price data from government sources.
The big picture
In an era of rising rents, a 1.3% drop from September to an average monthly payment of $ 2,222 may seem modest, but it’s the biggest one-month drop in ApartmentList data dating back to 2017.
The October rent cuts in 39 of the 44 major cities are an extension of the discounts. A year ago, rent drops were found in only nine cities.
Where are rents falling fastest in California?
Let’s not forget that rents remain high.
Apartment rents in California’s big cities increased 3.5% in one year after gaining 19% in the previous 12 months. The 2022 pace seems more “normal” as rent increased at an average annual rate of 3.2% in 2018-19. (By the way, in the 2021 real estate craze, rents were up 2.9% in August alone!)
The bottom line
Statewide apartment rents also fell in September, an average decline of 0.4% in one month with declines observed in 33 of the 44 cities.
It is true that fall is not a great season for renters. Yet this two-month decline is in line with industry buzz, suggesting that the pandemic’s changes to living arrangements appear to have stopped, at least temporarily.
The frantic hunt for the apartment is over. Work from home and remote schooling have decreased, reducing the need for larger housing and reducing the opportunity for rentals away from employment centers. Furthermore, the increase in rents combined with the economic uncertainty of 2022 has made life with family or roommates more popular.
To be fair, we should wait until early 2023 to determine whether the recent rent cuts are simply seasonal swings or the start of a major recession.
Rental statistics vary not only geographically, but also based on who counts what, where and when.
Many studies track management company prices for large apartment complexes. Compare that to the Consumer Price Index Rental Index, which is drawn from a survey of consumers living in a wide range of rental arrangements.
Remember, the CPI also covers small homeowners who own a slice of the rental market and are often priced very differently than giant homeowners.
Look at the statewide CPI rental inflation measures for September and you will see an increase in rental rate hikes.
Riverside and San Bernardino Counties: Up 7.9% in one year compared to a 4.3% increase 12 months earlier.
San Diego: Up 7.6% in one year compared to 3.2% 12 months earlier.
Los Angeles and Orange Counties: Up by 5.3% in one year compared to 1.1% 12 months earlier.
Bay area: Up 2.3% in one year compared to 0.1% 12 months earlier.
Jonathan Lansner is the business columnist for the Southern California News Group. He can be contacted at [email protected]