As an expert in the rental housing market, I can confidently say that California is a great indicator of whether or not the market is cooling down. In Los Angeles, rent growth peaked in April at 22%, according to Ratiu. Since then, the region has seen a dramatic decrease in rent growth, with prices rising by only 4% in July compared to the previous year. Surprisingly, the cities with the highest rental prices are not Los Angeles or San Francisco.
San Diego, San Jose and the Bay Area are the three most expensive metropolitan areas in the country, and they are still seeing increases in rent prices. However, California's numbers are encouraging. Across the country, big cities have felt the pressure of an exodus of tenants at the start of the pandemic, as well as in suburban areas. Rent increases in California peaked and fell earlier than other parts of the country, according to Ratiu.
The average rent for a one-bedroom apartment in expensive cities like San Francisco, Manhattan and Seattle is declining, while cities like Kansas City, Missouri; Gilbert, Arizona; and Las Vegas are experiencing spikes in average one-bedroom rental prices. The CEO of the Greater Los Angeles Apartment Association, Daniel Yukelson, believes that at some point prices will stabilize as cities begin to reopen and people seek to return to work. With remote work at stake, many people are leaving expensive cities like New York, Los Angeles, and Chicago to go to the suburbs or more affordable cities like Austin, Phoenix or Nashville.The new report comes as Los Angeles and many places in Southern California are experiencing tremendous demand for apartments to rent. Clean energy is booming and not all rural communities are adopting it.
The signs of the slowdown seen in California are already being hinted at in national numbers.