As rental prices across the United States continue to rise, with the national rent index for one and two-bedroom units increasing by 1.2% in May 2024, California’s largest cities are experiencing a different trend. According to a recent report by the rental platform Zumper, several major California cities have seen a decline in rental rates, despite the national upward trajectory.

According to the California Apartment Association, Zumper’s National Rent Report, which analyzes data from over one million active listings across 100 cities, reveals that 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 were observed in Oakland and Sacramento, where rates fell by 8-9% compared to the previous year. Other major cities, including Los Angeles, San Jose, San Francisco, San Diego, and Long Beach, also experienced declines, albeit to a lesser extent.

Interestingly, the report suggests that the primary driver behind the falling rental prices in California is not an increase in housing supply, but rather a decrease in demand. In recent years, the Bay Area and Los Angeles have witnessed substantial population outflows and job losses, which have not yet been fully recovered. Moreover, California recorded the highest unemployment rate among all states in April 2024.

The contrast between California’s rental market and the rest of the country is particularly striking when compared to cities like Syracuse, N.Y., and Columbus, Ohio, which saw the fastest-growing rents nationwide, with annual increases exceeding 20%. These cities’ growth has been attributed to factors such as population growth, expanding employment opportunities, and a higher demand for rental units.

Real Property Management Select specializes in offering tailored property management solutions to help landlords navigate the changing market dynamics. Whether you’re looking to adjust your rental rates or need advice on handling vacancies, our expert team is here to assist.