Rent prices fall across Sunbelt, bucking U.S. upward trend

While the national rental market is trending upward for the first time in a year, the Sunbelt region is in the doldrums, with some major cities seeing some of the steepest rent declines in the country, according to Redfin data. .

Across the Sunbelt, metropolitan areas include Austin, Texas; Nashville, Tennessee. and Jacksonville, Florida, where rental prices are falling. The change marks a reversal from increases seen during the pandemic and reflects an oversupply as the construction boom outstrips demand, experts say.

“The Sunbelt has built a ton of new apartments in recent years, in part because of the large amount of people who moved in during the pandemic housing boom,” Sheharyar Bokhari, senior economist at Redfin, said in a Redfin report. This is to meet the surge in demand brought about by the

“But the boom is over and property owners are now struggling to fill vacancies, which is causing rents to fall,” he added.

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The Sunbelt is a region that stretches across the southern and southwestern United States and includes states from Florida to California. Notably, the region is also a hotspot for real estate development, especially during the pandemic, where remote work policies have allowed many people to relocate from colder, more expensive cities.

The region is reeling from the effects of over-expansion, the report said. A construction boom aimed at meeting increased demand during the pandemic has now created an oversupply of available real estate. Coupled with the normalization of migration patterns, there is now downward pressure on rents.

In cities such as Austin, rents plummeted 6.6% year-over-year, according to Redfin data. In Nashville, Tennessee, they fell 5.9%, and in Jacksonville, Fla., they fell 5.6%. The figures represent some of the steepest declines across the U.S., with the national median asking rent elsewhere rising just 1.1% to $1,648.

“The good news is that increased housing supply in the Sunbelt has improved affordability for renters. This holds lessons for other American cities grappling with housing affordability challenges. “It’s possible,” Bokhari said.

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Florida’s major metropolitan areas are also seeing declines. In Miami, rents fell 5% and in Jacksonville, they fell 5.6%. Like other cities in the state, the city is experiencing an influx of new construction that outpaces current demand, leading to lower rental prices.

The oversupply problem is also reflected in other Sunbelt cities like San Diego and Phoenix, where rents fell by 4.7% and 4.6%, respectively.

However, the region’s decline stands in contrast to trends in other parts of the country, particularly in the Midwest and Northeast, where rental markets are on the rise. For example, Minneapolis and Cincinnati saw the biggest increases, with rents increasing by 10.3% and 9.9%, respectively.

Although the rate of rent increases has slowed compared to the pandemic period, asking rents remain high, creating affordability issues for some renters, Redfin noted. Median rent prices in April were $52 below the all-time high of $1,700 set in August 2022.

As of last month, the top 10 U.S. metro areas with the largest year-over-year declines in asking rents were:

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The article Sunbelt rental property retreat bucks U.S. upward trend originally appeared on Benzinga.com.

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