"Monthly Rent Drops 20%" US Housing Market Tension... Largest Slowdown in 13 Years

Luxury housing prices drop significantly... Mid-range and affordable homes with high demand remain expensive

After soaring to unprecedented heights following the COVID-19 pandemic, U.S. rental prices have slowed down the most in 13 years. This is mainly due to significant rent decreases in luxury housing. However, rents for mid- to low-priced housing, which remain in high demand, continue to show a moderate upward trend.

On the 6th (local time), The Wall Street Journal (WSJ), citing real estate data firm Yardi Matrix, reported that overall U.S. rents increased by only 0.3% last year compared to the previous year. This is the slowest rent growth rate since 2010.

It is analyzed that the decline in rents was largely influenced by luxury housing such as penthouses. During the COVID-19 pandemic, a boom in luxury housing construction occurred due to low interest rates and high expected rental yields, leading to a significant increase in supply relative to demand.

In Austin, considered one of the affluent cities in the U.S., homeowners who previously rented out properties for $5,000 or $8,000 per month are now reportedly offering them at prices up to 20% lower. WSJ explained, “Some new apartments in Chicago are offering several months of free rent upon signing a lease.”

Mid- to low-priced housing continues to experience a moderate rise, placing a considerable financial burden on many tenants. In December last year, rents for mid- to low-rise apartments in the U.S. increased by 2% compared to the same period the previous year. Although this is a clear slowdown from the double-digit increases seen in 2020-2021, rents remain about 20% higher than in 2020.

According to data provider Costar Group, rents in mid-income neighborhoods such as Kansas City, Indianapolis, Chicago, and Philadelphia increased by 3-6% in December last year compared to the previous year, surpassing the rent growth rates of luxury properties in similar metropolitan areas.

Whether rents for mid- to low-priced housing will decline remains uncertain. This is due to steady demand for housing in this price range. Additionally, given the high construction and labor costs inherent in the housing industry, luxury housing construction tends to be prioritized, limiting the supply of mid- to low-priced housing, which also acts as a factor restricting rent decreases.

This content was produced with the assistance of AI translation services.