California’s rental market is taking a nosedive, with major cities seeing huge drops in rent prices.
California Rents Take a Dip
According to Zumper, an online rental platform, it could be time to move to California.
California Renters Rejoice
Plunging rents across the state means that what was once a super expensive place to live might finally become an affordable option for many.
Cali Cool-Off
Zumper surveyed 11 cities in California and discovered that in seven of them, rents had fallen – some substantially.
Bay Area Bargains
They found that in May, rents in Oakland plunged by over 9%. Sacramento wasn’t too far behind either, with an 8% drop in rental prices compared to last year.
Rents on a Roller Coaster
It’s a surprising turn of events, considering that the national average for rent is up across the board. Zumper’s national rent index shows that one-bedroom homes rose by more than 1% to just over $1,500, and two-bedroom places saw a similar increase, nearly hitting $1,900.
Housing Exodus
But what’s driving this unlikely price drop? Well, Zumper claims that the main culprit is a shrinking population in California’s big cities.
Population Shifts
From 2020 to 2023, the Bay Area (San Francisco-Oakland-Fremont) lost nearly 4% of its residents. The Los Angeles-Long Beach-Anaheim area saw just under a 3% drop, and San Jose-Sunnyvale-Santa Clara wasn’t far behind with a 2.5% decline.
Why Californians Are Fleeing
According to Crystal Chen, a spokesperson for Zumper, it’s all down to demand. “The demand for housing has lessened, and that’s why prices are going down in many big cities,” she said in an interview with Newsweek.
Jobs and Rent
California’s economic woes are also adding fuel to the fire, as the state still hasn’t bounced back from the COVID-19 job losses.
California’s Economic Tug-of-War
Los Angeles is down 60,000 jobs, and San Francisco has 45,000 less jobs than pre-pandemic levels. The state’s unemployment rate is at 5.3 percent, which is higher than the national average. With fewer jobs and more people struggling, it’s no wonder rents are falling.
Californians Seek Cheaper Pastures
“The California economy isn’t doing the best right now,” Chen said. “I think in the short term this trend will continue to happen where people are moving out of California since it’s so expensive to live here.”
California vs. the Rest of the Nation
While California is struggling, other parts of the country are seeing the opposite. Syracuse, New York, and Columbus, Ohio, are experiencing huge rent hikes. Syracuse saw nearly a 29% increase, and Columbus wasn’t far behind with a 22.5% jump.
Landlords Reap Rewards Elsewhere
Landlords in these places are thriving as more people move in, pushing up the demand for housing.
Rent Rankings
Here’s a look at the top 5 U.S. cities with the biggest drops in one-bedroom rent prices for the year ending in May, according to Zumper: Greensboro, North Carolina, saw a price decrease of 11.9%, with an average one-bedroom rent price of $960.
Arizona and Texas Rent Trends
Gilbert, Arizona, saw a price decrease of 10.5%, with an average one-bedroom rent price of $1,450. Fort Worth, Texas, saw a price decrease of 10.3%, with an average one-bedroom rent price of $1,220.
Tar Heel Tumble
Raleigh, North Carolina, saw a price decrease of 9.8%, with the average one-bedroom rent price being $1,290. Durham, North Carolina, saw a price decrease of 9.6%, with the average one-bedroom rent price becoming $1,420.
Rental Reshuffle
California’s rental market is in a rough spot. With fewer people living in the state’s big cities and the job market struggling, rent prices are likely to keep falling.
Sunset for Landlords
While this is great news for residents, it’s not such good news for landlords.
Record Highs to Lows
This new report comes as last month saw record high rents in three major cities. Indianapolis saw rent prices hiked up to an average of $1,334, Milwaukee rents hit a historic $1,671 average, and Minneapolis rents reached an average of $1,529.
Urban Upticks
These are the highest average rent prices these cities have seen since 2019 and are bigger increases than the national average.
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The content of this article is for informational purposes only and does not constitute or replace professional financial advice.