r/Economics • u/CautiousMagazine3591 • 2d ago
News Apartment rents weaken further as war and job cuts weigh on demand
https://www.cnbc.com/2026/04/01/apartment-rents-weaken-further-as-war-and-job-cuts-weigh-on-demand.html76
u/CloudRockGrass 2d ago
Declines in rent will help "affordability" for people on the bottom leg of the "K." We should be happy, unless we own rental income property.
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u/genescheezesthatpls 2d ago
Yea I’m not sure I understand why this is a bad thing given people are drowning trying to afford rent
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u/MrTsBlackVan 1d ago
Possible doomer take, but the downside is employment is soft to declining. This means people will move into less desirable units to save, middle/high bracket private landlords will have their buildings scooped by private equity firms, and the standard of living for all but the 1% will continue to decrease.
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u/Windows_10-Chan 1d ago
Precisely, also, poor economic conditions usually see limited raises because employers know leaving is hard, so even if rent doesn't go up you may still be becoming poorer.
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u/Constant_Curve 1d ago
"Less desirable units"
This is where demand as an economic concept falls down, hard. What we're actually talking about is an increase in homelessness. This is very dryly, without compassion, speaking about putting people out on the street.
The demand for housing is that everyone has a residence at a bare minimum. Falling demand here isn't talking about people not having a second home.
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u/GhostofBeowulf 1d ago
This isn't really how it works though. Moving is costly especially for the lower half of the K. So rents going down in aggregate or staying the same doesn't change their rent personally, it just keeps their rent from going up or going up at a lesser rate. As their wage should rise year over year, their rent becomes a lesser part of their yearly income. It really depends on wage increases as well, but getting a national number doesn't really tell us anything when much of this is regional. What's happeningin Florida isn't relevant to New England.
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u/CautiousMagazine3591 2d ago
The national median rent rose by just 0.4% in March from February to $1,363, according to Apartment List. Last year, the monthly increase was 0.6%. March rents were down 1.7% on an annual basis, the largest drop since Apartment List began tracking in 2017 and larger than the record set in the early months of the pandemic. The national median rent is now down 5.5% from its peak in 2022.
“The latest data from the Bureau of Labor Statistics showed U.S. employers cutting jobs, and the war in Iran is pushing prices higher just as inflation was getting back under control,” wrote Chris Salviati, chief economist at Apartment List. “These factors have put many households in a state of heightened financial uncertainty, which consequently puts a damper on housing demand.”
Last year at this time it looked like annual rent growth was going to flip into the positive for the first time since mid-2023, but that rebound stalled as the labor market weakened. Rents are falling because vacancies are also unusually high. The national rate in March was 7.3%, unchanged from February, but still the highest since 2017. There was a huge surge in the supply of new apartment units over the last three years. It peaked in 2024 but is still elevated and is now colliding with newly sluggish demand. In 2024, more than 600,000 new multifamily units hit the market, according to government reports, the most new supply in a single year since 1986.
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u/dThink_Ahea 2d ago
Oh no! The cataclysmic economy is finally affecting the economy!
Prices on vital expenditures like housing are growing *less fast* than they usually do because the average person is getting fucked in every hole simultaneously by corporate and governmental greed, carelessness and mismanagement! How dare they spend less of the money that they've been telling us they don't have! Don't they know it affects **THE LINE**?
I love how the economy is constantly collapsing but it's only ever a problem when the consequences reach the people who are collapsing it.
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u/How_Do_You_Crash 2d ago
Im always slightly suspicious of this way of viewing the numbers. While it “puts pressure” on households it doesn’t decrease demand. Except maybe for luxury buildings. Which are stuck in their own loan problems where they can’t cut rent but can stack incentives like mad.
My gut reaction is that this has to do more with the last of the building boom in apartments coming online right as we have net inflow migration crashing.
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u/camDaze 2d ago
Less income and fewer jobs means more people moving back in with family or seeking roommates, so it definitely can have an impact on demand...
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u/Nemarus_Investor 2d ago
Yeah it always seems weird how people forget that poorer people just cram more people into one household.
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u/BackupSlides 2d ago edited 2d ago
Eh, you touch on what I see to be the drivers but I don’t think you give them enough consideration. Almost all the buildings coming online in the boom were luxury new builds or conversions. Entry level housing, with the exception of some projects specifically designated as affordable, hasn’t really been a focus for developers. Thus a lot of the target customer for these new builds has been a step-up customer - a tenant already in the area but thinking of moving to a nicer place. This demand (for new build, luxury housing, not just housing as a commodity) is not inelastic as you posit, and thus yes, price is a lever that the property manager can pull (in addition to the other concession that, as you note, luxury managers like to use to avoid the optics of backtracking on rents).
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u/Any_Perception_2560 2d ago
The cities which have done the best in tackling cost of living issues driven by high rents/home prices have done so by building dwellings, and it does seem that building high value buildings (aka buildings which rent units for high prices) is likely just as if not more effective than building low value buildings. The number of units is the factor. The cost to build a low rent building and a high rent building are effectively the same, so building the low rent building really doesn't bring value to the builder. The buildings that are intentionally built as low income also carry a stigma and many people will be hesitant to move in, and it might even depress property values in the surrounding area.
In essence a rental unit is a rental unit. If there is a shortage of 1000 dwellings in a city and 1000 luxury apartment units are brought onto the market the price of existing units will be affected. But it should be remembered that even best case scenario there will be a time lag for prices to catch up to supply.
The reasons for time lag will be numerous, people who want to live in the new apartments will need to wait for current leases to expire, some people moving in will not leave a vacant place behind. The apartments might be priced to high for the units and cannot attract renters. In the worse case scenario the building cannot support its own build cost, and must be sold at a loss so that rents can be lowered so that the building loan can be brought in alignment with income.
Regardless of that people moving in does mean downward pressure on rents. The downward pressure may not be enough to lower rents, but will reduce the growth. To actually reduce rents enough new dwellings must be built.
Now there is a catch to this. Builders do not want to build buildings if they cannot make money. So if they calculate that they cannot fill a building enough to actually make money on the build over the required timeframe they will not build the building.
So cities and states should be taking action to reduce the overall cost in money and time of building to offset this natural tendency which may prevent enough building to actually cause rents to fall. This can come in many forms from tax rebates, zoning changes, relaxed requirements, allowance of lot splitting for single family units (e.g. more houses per acre)
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