As rent across the United States continues to rise, some Californians are experiencing a different reality. People living in some of the biggest California cities, including Sacramento and Los Angeles, are paying less rent than before, according to a May 28 report from digital marketplace Zumper.
This surprising trend is largely due to a decline in demand, the national rent report revealed.
Zumper’s report analyzed housing data from more than 1 million active property listings across 100 cities, according to the California Apartment Association.
The findings indicate that a total of seven of the 11 California cities included in the report have declining rental markets, with the majority landing in the top 20th percentile in terms of price and population.
Significant Drops in Rent Prices
Oakland led Zumper’s list of annual rent declines in California cities, with the cost to rent a one-bedroom unit in the Bay Area community down 9.1% in 2024 compared to the past year.
According to the source, this substantial drop places Oakland at the top of the list. Following closely, Sacramento experienced a decrease of 8.1%, while Los Angeles saw a 5% reduction in rent prices.
Other cities that made the list include San Jose, San Francisco, San Diego, and Long Beach, with annual rent costs for one-bedroom units down between 1% and 2.3%. These decreases, though not as dramatic as those in Oakland and Sacramento, still represent a notable shift in the rental landscape of these major cities.
The Reasons Behind the Decline
The Zumper report suggests that it is less of a supply factor driving rents down in California right now and more of a demand one. Unlike many other U.S. markets where increased housing supply is reducing rents, California’s situation seems to be influenced by other factors.
Using data from the property management software RealPage, researchers reported that the Bay Area and Los Angeles have undergone substantial population and employment declines in recent years.
Meanwhile, Sacramento’s occupancy rate experienced a steady decline between 2021 and 2023, according to real estate company Colliers.
Comparing California Rent Prices to the Rest of the U.S.
While some Californian cities are enjoying lower rent prices, the national trend is moving in the opposite direction. The national rent index for one and two-bedroom units increased by 1.2% in May, according to the Zumper housing report.
This marked the first time monthly growth rates have exceeded 1% since October 2022.
National rent medians now range from $1,504 to $1,865 per month. Zumper CEO Anthemos Georgiades noted that this notable rise in rent, coupled with persistent inflation, suggests that there will be even more pressure on the Consumer Price Index (CPI) in the coming months.
The CPI measures the average fluctuation over time in consumer prices, and high inflation rates could push federal rate cuts further than anticipated. Nationally, renting a one-bedroom unit is $287 pricier per month compared to four years ago, while rent for a two-bedroom unit is nearly $400 more expensive per month.
High Rent Prices in Major U.S. Cities
Despite the rent decreases in several Californian cities, other parts of the country continue to see high rental costs. According to Zumper, the 10 cities with the highest monthly median rent prices for one-bedroom units in the United States are:
- New York: $4,200 per month
- Jersey City, New Jersey: $3,330
- San Francisco: $2,950
- Boston: $2,830
- Miami: $2,770
- San Jose: $2,570
- Arlington, Virginia: $2,380
- San Diego: $2,370
- Los Angeles: $2,300
- Chicago: $2,220
These cities remain some of the most expensive places to rent, highlighting the diverse rental market trends across the nation.
Conclusion
While rent prices in many parts of the U.S. continue to climb, residents in several major California cities are finding relief in the form of decreasing rent costs.
Oakland, Sacramento, and Los Angeles have seen the most significant drops, driven primarily by decreased demand. This trend offers a rare respite in a state known for its high consumer prices, giving Californians a break from the relentless rise in living costs.
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