Will Rent Prices Go Down in 2023? Here’s What Experts Say
If you’re a renter like I am, you can probably relate to this experience. It’s the time of the year when my annual lease is almost up. Someone from building management slips an envelope under my door. I open it and scan quickly through the letter to find those two words: rent increase. And I brace myself a little for what’s to follow. How much is it going up this year?
In 2021 and 2022, rents increased at annual rates that are higher than pre-pandemic levels. “If they haven’t already gone up in your city, you should at least be prepared for it. It’s impossible to see into the future, but it is possible to prepare yourself in case that scenario continues,” says real estate agent Jon Shefsky, who specializes in short and long-term leases.
As we move into the new year, are rental prices going to keep up the steep climb, will they level out, or even go down? The agents I spoke to stressed that while the market is unpredictable, the trends they see in their profession are pointing to continued increases.
Yes, Rents Will Rise
Remember, rents are consistently going up, little by little. “There’s always going to be a modest two percent annual increase,” explains Los Angeles-based real estate agent Ashley Temm. “But the average rent for a one-bedroom apartment in this city is up 18 percent from last year. I foresee that trend continuing.”
Many of the emergency tenant protections that were put in place during the pandemic have either been lifted or are about to come to end. That means rental managers can resume raising their rents. And real estate pros believe they will, because landlords are anxious to get back to operating a profitable business. “Landlords are recovering from financial loss because of the eviction moratoriums. They want to increase their rents and get that loss recouped,” says Temm.
There May Be a Silver Lining
Is there any good news for renters in 2023? According to Temm, we can expect property management companies to work harder to attract new tenants. Be on the lookout for more apartment owners to advertise incentives, such as one month of free rent, discounts on renters’ insurance, complementary moving vans, or referral bonuses. “Times are tough, and the cost of living has skyrocketed. People don’t want to pay higher rents, so landlords will end up with outstanding inventory,” says Temm.
Plus, the hot housing market has cooled, so the current renters who were priced out the past several years can finally circle back on their dream of home ownership. But empty apartments don’t create income for their owners. “If they don’t want to eat the cost of so many vacancies, they’re going to have to start offering incentives and perks.”