Austin January Rents Fall 16%, $400 Below Record High
The median U.S. asking rent in January was $1,599, showing a slight dip of -0.1% year over year, and a modest rise of 0.5% month over month, according to a new report from Redfin, a technology-driven real estate brokerage. While the year-over-year change in rents was minor, the rent per square foot for apartments dropped 1.5% year over year to $1.80, but saw a 0.8% increase compared to the prior month.
This stabilization in rents comes as the number of available apartments is aligning closely with the demand for rentals. Rents had surged during the pandemic-driven housing boom when supply couldn’t keep up with the demand, leading to skyrocketing rents. However, after 2023 and early 2024, the market has seen a slowdown in rent growth, as builders ramped up construction to meet the increased demand. As the flow of new apartment construction has slowed, supply is in line with demand, and as a result, rental growth is leveling off.
Sheharyar Bokhari, Senior Economist at Redfin, shared his insight, stating, “Rental supply and demand are in lockstep, which is keeping rent growth at bay, but that may not last long. Apartment construction could be further hampered by new tariffs on building materials. At the same time, demand for apartments continues to grow, driven by high mortgage rates and home prices that make homeownership unattainable for many Americans. Rents will likely rise again if demand starts to significantly outpace supply.”
One notable metro area where rental dynamics are shifting is Austin, Texas. In January, Austin saw a remarkable drop in asking rents, with a 16% year-over-year decrease, marking the largest decline among 44 major U.S. metropolitan areas analyzed by Redfin. The median asking rent in Austin has fallen to $1,399, which is $400 lower than the record high of $1,799 in August 2023. This drop is attributed to the overbuilding of apartments in Texas, where more housing is being delivered compared to other states. Additionally, the region has faced challenges like natural disasters, which have made some residents hesitant to stay in Florida, contributing to the overall decline in rents.
Other metro areas in Florida and Texas have experienced similar trends. Tampa, Florida, saw a 8.2% drop in asking rents, followed by Salt Lake City with a 6.5% decline, Jacksonville, Florida (-6.4%), and New York (-5%). On the other hand, cities like Cincinnati, Providence, and Louisville are experiencing strong rent increases, with rents climbing by 15%, 13.4%, and 10.5% respectively. These areas have attracted higher demand due to increased migration and economic development.
Rents are also down across all apartment sizes, with larger apartments seeing the largest drop. For the seventh consecutive month, asking rents for apartments of all sizes have fallen. The median asking rent for 3+ bedroom apartments decreased by 1.7% year over year to $1,966. Smaller apartments have also seen slight declines. Asking rents for 0-1 bedroom apartments fell by 0.6%, to $1,458, while rents for 2-bedroom apartments declined by 0.4%, to $1,674.
Los Angeles, however, has seen a different trend. Following devastating wildfires, the demand for rentals surged, particularly for larger apartments. Although the median asking rent in Los Angeles remained largely unchanged from a year ago, 3+ bedroom apartments experienced a notable rise in asking rents. These apartments saw a 3.9% increase year-over-year, reaching $3,950. This increase reflects the heightened demand after many families were displaced by the wildfires. While 0-1 bedroom and 2-bedroom apartments in Los Angeles saw smaller price increases, it’s clear that the demand for larger units has pushed prices higher. Overall, Los Angeles remains one of the most expensive rental markets in the country, with a median asking rent of $2,780, and the third-highest rental prices in the nation.
This overall trend of decreasing rents in most cities, alongside the increase in larger apartments in Los Angeles, reflects a changing landscape in the rental market. Renters are becoming more cautious about where they move, with shifts in market fundamentals, local economies, and the availability of affordable housing.
In the face of the shifting rental landscape, Redfin’s report shows a mixed outlook for 2025, with some metro areas witnessing stabilizing rents, while others are still grappling with housing shortages and rising demand. In places like Austin and other Texas cities, the slowdown in rent growth is welcomed as a sign of the market adjusting after a period of rapid expansion. In contrast, areas with high demand but limited housing supply, like Los Angeles, may continue to see rent hikes in select property types, especially larger apartments.
As the market enters the new year, renters may see fluctuations based on local economic conditions, housing availability, and the ongoing effects of the pandemic on supply chains and construction costs. The overall outlook is a more stable rental environment, but with potential for price increases if demand starts to surge again, particularly in areas where housing construction is slowing down or impacted by new tariffs on building materials.
Redfin, which operates the country’s largest real estate brokerage site, serves millions of customers and helps them save money while finding homes. The company’s services span brokerage, rentals, lending, and title insurance, and it provides real-time insights into the rental market and housing trends. With its innovative technology, Redfin continues to empower users by delivering data-driven insights, ensuring that renters and homebuyers alike are equipped with the latest market trends and projections.
In conclusion, while the rental market in the U.S. may have stabilized in recent months, local market conditions will continue to play a significant role in shaping future rent trends. As cities like Austin experience a slowdown, areas such as Los Angeles may see continued pressure on larger apartments. The coming months could bring new changes to the rental landscape as both supply and demand evolve.
