Rentals are a large piece of the real estate puzzle for agents and fluctuations in median asking rents should always raise some eyebrows in the grand scheme of your business.
According to a Wolf Street report, even in the pricey San Francisco rental market, the median asking rent for a one-bedroom apartment dropped 6.1 percent in May from a year ago to $3,370. Overall, it is off more than 8 percent from the peak in October 2015. The prices are rents in multifamily apartment buildings, according to Zumper’s National Rent Report. It does not include the rent for single-family homes, nor does it include incentives.
On the East Coast, it is a similar story, where New York City’s rental market saw the median asking rent for a one-bedroom plummet by more than 10 percent year-over-year to $2,900. This is down nearly 14 percent from the peak, set in March 2016.
According to the report, San Jose’s median asking rent for a one-bedroom increased 3.5 percent year-over-year to $2,370. However, the median asking rent is down 2.5 percent from the peak in April 2016.
One factor is a construction boom that has seen a number of high-end apartments and condos offered in the rental space as new job creation in the economy sputters. As a result, landlords have to get creative to ensure their units are rented. This has led to an increased offer of incentives.
If you were to factor incentives, like two months free, into the equation in the City by the Bay, the first-year median rent of a two-bedroom apartment would be down 25 percent from its peak, or $15,000 for the year.
According to the report, the top five most expensive rental markets for a one bedroom unit, and change from a year ago, are San Francisco ($3,370, -6.1 percent); New York ($2,900, -10.8 percent); San Jose ($2,370, 3.5 percent); Boston ($2,200, -3.5 percent) and Washington, D.C. ($2,160, -2.7 percent.) Los Angeles, at No. 6, saw rents increase 8.1 percent to $2,130.)
San Francisco ($4,500, -6.3 percent) also tops the list for a two-bedroom unit. Rounding out the Top 5 are New York ($3,400, -7.9 percent); Washington, D.C. ($3,190, 1.3 percent); Los Angeles ($3,050, 5.2 percent); and San Jose ($2,870, -1.4 percent).
Boston has been no exception to the rising apartment construction rates. According to Yardi Matrix senior analyst Doug Ressler, this growth doesn’t appear to be slowing down anytime soon. It also means good news for those who hope to rent in some of the country’s historically pricey markets.
“Renters have much reason to be optimistic. After a long period of incessant rent increases, rents are finally slowing down — even in some of the country’s higher-rent cities, like San Francisco and New York. Even if demand for apartment living is still robust, rent growth will continue to taper off in the coming months, mainly prompted by the record number of new apartments entering the country’s tightest markets.”