Apartment Rents Drop in Seven of 11 Major California Cities

Even as apartments nationally continue to rise, with the national rent index for one and two-bedroom units increasing by 1.2% in May, California’s largest cities are moving in the opposite direction, the California Apartment Association reported. According to Zumper’s National Rent Report, seven out of eleven major California cities reported negative annual rent rates for one-bedroom units. Notably, most of these declining markets rank among the top 20% in terms of price and population.

The most significant drops in rental prices occurred in Oakland and Sacramento, where rates fell by 9.1% and 8.1%, respectively, from a year ago. Other major cities also experienced year-over-year declines, although the decreases were smaller, including Los Angeles (5.0% decrease), San Jose (2.3%), San Francisco (1.7%), San Diego (1.3%) and Long Beach (1.1%).

CAA noted that per the Zumper report, the primary driver behind the falling rental prices in California is not increasing housing supply, but decreasing demand. In recent years, the Bay Area and Los Angeles have witnessed substantial population outflows and job losses, which haven’t been fully recovered. Additionally, California recorded the highest unemployment rate among all states in April 2024.

Article courtesy of Paul Bubny of connectcre.com.