Rent prices are falling in 7 California cities, new report says. Which saw the biggest drop?

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.

That’s largely due to a decline in demand, the national rent report said.

To come up with its rankings, Zumper analyzed housing data from more than 1 million active property listings across 100 cities, according to the California Apartment Association.

How much did rent costs decrease in 7 California cities?

The Golden State is notorious for its high consumer prices, from gas and groceries to housing and child care.

However, a total of seven of the 11 California cities included in Zumper’s report have declining rental markets, with the majority landing in the top 20th percentile in terms of price and population.

Oakland led Zumper’s list of annual rent declines in California cities, with the cost to rent for a one-bedroom unit in the Bay Area community down 9.1% in 2024 compared to the past year.

Sacramento took second place with a decrease of 8.1%, followed by Los Angeles in third place with 5%.

San Jose, San Francisco, San Diego and Long Beach also made the list with annual rent costs for one-bedroom units down 1% to 2.3%

“It seems that it is less of a supply factor that is driving rents down in California right now, which is what’s happening in many other U.S. markets ... (and) more of a demand one,” Zumper housing researchers wrote in an article titled “Zumper National Rent Report.”

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 underwent a steady decline between 2021 and 2023, according to real estate company Colliers.

How do California rent prices compare to rest of US?

The national rent index for one and two-bedroom units increased by 1.2% in May, according to the Zumper housing report.

National rent medians range from $1,504 to $1,865 per month.

This was the first time monthly growth rates have increased by over 1% since October 2022.

“This notable rise in rent coupled with the current persisting inflation suggests that there will be even more pressure put on the CPI in the coming months,” Zumper CEO Anthemos Georgiades wrote in the article.

High inflation rates could push federal rate cuts further than anticipated, he added.

The Consumer Price Index — or the CPI — measures the average fluctuation over time in consumer prices.

Nationally, renting a one-bedroom unit is $287 pricier per month compared to four years ago.

Rent for a two-bedroom unit is nearly $400 more expensive per month.

This story was originally published June 12, 2024 at 3:10 PM with the headline "Rent prices are falling in 7 California cities, new report says. Which saw the biggest drop?."