As reported by Apartment List in their January report, rent prices have decreased in 90 of the 100 largest cities in the nation as of December 2022. In December alone, national rents dropped by 0.8 percent. This is the fourth straight month of decline.

Plotted in the chart below, which shows how this year's winter price declines are more significant than those of previous years.

“We expect that 2023 will see bargaining power shift back to renters, and that rent prices this year will grow only modestly, if at all,” the Apartment List research team writes.

“The recent slowdown has been geographically widespread. Rents decreased in December in 90 of the nation’s 100 largest cities. New York City saw the nation’s sharpest decline, with prices down by 3 percent month-over-month.

“And over a longer horizon, we are continuing to see an ongoing cooldown in many of the recently booming Sun Belt markets. Las Vegas, Phoenix, Jacksonville, and Riverside all rank in the top 10 for fastest rent growth since March 2020, but none of these metros has seen rents increase by more than 1 percent over the past twelve months.

As detailed in the January report from Apartment List, we are also seeing a cooldown in rent prices here in Oregon with a 2.1% decline this December. Same as what happened ntionally, this also marks the fourth straight month of decline. The chart below shows that this winter’s price declines in different cities in Oregon. Rental prices in Portland and Hillsboro show the biggest drop with a 2.88% and 2.04% decline in December respectively.

Vacancy rate continues to rise

This cooldown is being mirrored by continued easing on the supply side of the market.

“Our vacancy index now stands at 5.9 percent, after more than a year of gradual increases from a low of 4.1 percent last fall. And in the past four months, this easing of the vacancy rate has picked up steam again, after plateauing a bit over the course of last summer.

“Today’s vacancy rate still remains slightly below the pre-pandemic norm, but is quickly approaching that benchmark,” the report says.

The vacancy rate has increased by 0.8 percentage points in the last four months, reaching 5.9 percent in December 2022.

“After a prolonged period of skyrocketing rent growth, and with non-housing related costs also getting more expensive as a result of broad-based inflation, it seems that some Americans are moving back in with family or roommates, or delaying striking out on their own. At the same time, new apartment construction is picking up steam again after facing pandemic-related delays in recent years,” the report says.

Conclusion

“This seasonal dip is likely to persist through the winter, but as moving activity picks back up in the spring and summer, we are likely to see a return to positive rent growth. We expect that 2023 will be a year of flat to modest rent growth, but it is unlikely that prices will fall significantly throughout the year,” the report says.

**Article originally published on https://rentalhousingjournal.com/