In all but a few of the most expensive cities in the USA, median rents on one- and two-bedroom apartments have fallen, sometimes quite sharply (for example, in NYC median asking rents on a one bedroom are down to $2940, a 12.8%/$430 decline from their peak in March 2016; while in Honolulu, rents are down 21.6% from their peak in Mar 2015, down to $1670 from $2130).
The glaring exception is San Francisco, which hit an all-time high in June: $3720 asked for the median one-bedroom (but even in San Francisco, two-bedroom rents have declined, down to $4800 from the peak of $5000 in October 2015).
The decline in rents in major cities is offset by skyrocketing rents in some of America’s smaller cities, like Chandler, AZ; Fresno, CA; Glendale, AZ; Denver, CO; Reno, NV; Spokane, WA; Scottsdale, AZ; and Gilbert, AZ. On the Media’s excellent, just-completed series on the eviction epidemic explains that while we think of the eviction crisis as a big-city phenomenon driven by gentrification, the real meat of the crisis is evictions in smaller, poorer cities, some of which have had large swathes of rental stock purchased by Wall Street hedge-funds who have chosen to perfect the art of speedy eviction rather than the art of maintaining liveable homes.
Meanwhile, the cities experiencing the steepest decline in rents are something of a mixed bag: Philadelphia (down 12.7%!), Baltimore, Columbus, Akron, Madison, Nashville (which is regressing to the mean after a record-setting surge last year), Seattle, Des Moines and Portland, OR.
While nationwide rents grew a little (0.9% last month in year-on-year rises), it was the slowest increase since 2017.
US home-ownership has fallen off a cliff since 2008 and the eviction crisis, and these rental properties often represent hugely leveraged, hugely financialized properties bought with the cheap money that the bailout made available to the financial sector, which bought them, debt-loaded them, and turned the stream of rents from them into complex financial products that they sold to pension funds and the other sucker-bet buyers who were reeling from the collapse of the housing market in the crisis. While falling rents represent a humanitarian gain for rent-stressed working people, they are also a canary in the coalmine, warning of the potential for imminent, cascading financial collapses.
In Southern California, the median asking rent fell in the most expensive cities: In Los Angeles, 1-BR rents fell 7.9% from their peak in December 2018 to $2,230; and 2-BR rents are down 5.7% from their peak in June 2018.Los Angeles County, with a population of over 10 million, has been experiencing a net outflow of the labor force and employed people. Since the peak in November 2018, the county has lost 103,000 people in its labor force and 68,700 employed people, and California has begun to panic about losing businesses and people to other states.
In San Diego, the median 1-BR asking rent is down 9.7% from its peak in December 2018; and 2-BR rents are down 4.8%. Rents are also down by similar degrees in Santa Ana (Orange County) and Long Beach. More in the table below.
Apartment Rents Fall in Seattle, Southern California, New York, Oakland, San Jose, Chicago, Honolulu [Wolf Richter/Wolf Street]
(via Naked Capitalism)