Renters Get the Most Bang for Their Buck When They Downsize
Rents Continue To Fall Across the U.S.
For renters looking for the most bang for their buck in the rental market, it might pay to go small.
While December 2024 rents were down overall in units of all sizes, studios saw the biggest decrease: 1.3% year over year versus 0.9% for larger one- and two-bedroom units, according to the latest rent report from Realtor.com®.
Rents were down in all but 11 of the 50 largest metropolitan areas. And in the markets where rents were up, in general, they were not up significantly.
The median rent for a studio unit in the 50 largest metros was $1,419, compared with $1,579 for one-bedrooms and $1,880 for two-bedrooms.
In December 2024, the U.S. median asking rent continued to decline month over month for the 17th consecutive month.
The national median rent was $1,695 in December, down $8 (0.5%) from November 2024 and $18 (1.1%) from December 2023 across the 50 largest metropolitan areas in the country.
One key factor contributing to the softer rental market is the increase in multifamily construction, which continues to progress through the pipeline, expanding the overall supply.
“We are reaping the benefits of the multifamily surge in housing starts that lasted throughout 2023, but as starts and completions slow, we anticipate seeing more balance in the rental market ahead,” says Danielle Hale, chief economist of Realtor.com.
“For renters, balance is welcome and signals an end to the pandemic era rental market spikes.”
Still, if renters are comparing rents now with what they were before COVID-19, they might suffer a bit of sticker shock.
In the past five years, even the cheaper studios are up by 11.3%. Two-bedrooms saw the most rent growth, at 19.8%, and one-bedrooms are 15.9% more expensive.
Though the rent declines over the past year and five months have been consistent, they haven’t amounted to major relief from the peak rent level reached in July 2022.
December’s figure is a mere 3.7% below that all-time high and still 16% above the mark from December 2019.
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Why studios are lagging in price
“The studio unit renter is most on the margins of being an independent household, and during the pandemic, many studio renters vacated their units to cut costs by moving in with family or roommates, and studio rents plummeted,” says Realtor.com senior economist Joel Berner.
“After the peak of the pandemic, many of those same studio renters moved back into their own 0-bedroom units, and studio rents saw growth for longer than rents for larger units due to the relatively high demand.”
Despite that, rent growth for studios from the pre-pandemic period to the present continues to lag behind that of larger units, suggesting that the supply of these smaller rentals has better kept pace with demand for them.
But in recent months, that gap has narrowed, and Realtor.com expects to see closer rent growths between rental sizes, so if you’ve got a studio on your mind, now is the time to sign that lease.
Where rents decreased the most
There’s no doubt about it: The Northeast is not only the most expensive, but also the most competitive area in the country to rent an apartment.
The Northeast has the highest absorption rates in the third quarter of 2023, meaning it had the highest share of newly built rental units that are successfully leased out within three months of completed construction.
It also stands out as the only area experiencing a higher absorption rate in third quarter 2024 compared with the same period last year, rising from 58% to 67%.
This trend corresponds with ongoing annual rent growth in markets like New York City, where rental prices continue to climb.
While all but 11 markets examined saw rental decreases, New York City-Newark-Jersey City saw a 5.3% increase year over year, to a median of $2,967 a month.
Those looking for the most bang for their buck should look to the South. It had the three largest decreases.
Memphis, TN, plunged 6.7%, to $1,174 a month; Denver-Aurora-Lakewood, CO, fell by 5.9%, to $1,799; Austin-Round Rock-Georgetown, TX, went down 5%, to $1,469.
While Los Angeles fell by 2.7%, to $2,750, December is likely the last month for a while to see decreases.
Despite laws meant to protect renters, price gouging is reported to be widespread in the wake of the destruction of thousands of residential buildings due to the L.A. wildfires.
Source: Realtor.com
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