California rents dipped 1% last year, first drop since 2020

California’s renters got a mild breather in 2023.

When my trusty spreadsheet looked at ApartmentList’s rent data – a curious mix of landlord listings and Census stats – it’s clear that the Golden State remains a pricey place to be a tenant, even after pandemic-era rent hikes ended last year. The stats track rents in 46 states and the District of Columbia.

The modest good news for California tenants is that rents by this measurement fell on average 1% last year to $2,156 after rising 11% in 2022 and 6% in 2021. Average rents fell 2% in 2020, the pandemic’s first year.

California was one of 12 states with declining rents last year. Nationally, rents fell 0.2%. The biggest drops were in Idaho, off 4.8%, Arizona, off 3.5%, and Nevada, off 3.4%. And California’s economic arch-rivals?

Florida had a 0.9% rent drop. Texas rents rose 0.2%.

But that slim 2023 decline still left California with the second-highest rent nationally – 54% above the $1,404 rent a typical American paid.

The only place pricier was Hawaii at $2,236. Cheapest? West Virginia at $886. Texas was No. 22 at $1,320, and Florida was No. 11 at $1,585.

It’s been tough to be a tenant since a coronavirus entered the economic picture. An initial rush to find extra living space created heated competition for housing. Rising rents got developers in a building mood – and that construction may be finally helping tenants.

But that’s why California rents remain 14% above 2019 – though if it makes anyone feel better, only four states had smaller increases.

Nationally, rents have risen 22% in four years. The biggest rent hikes were in New Mexico (46%), Delaware and New Hampshire (38%), and Florida and Idaho (35%). Texas rents rose 20%.

Mixed California

Rent swings are by no means universal across the Golden State.

Just look at the 12 most populous counties, ranked by last year’s rent change – with the local four-year price increases as perspective …

San Francisco: $2,738 – off 3.4% in a year but still up 7% since 2019.

Alameda: $2,054 – off 2.9% in a year but up 6%.

Riverside: $1,444 – off 2.8% in a year but up 10%.

Sacramento: $1,348 – off 2.6% in a year but up 6%.

Contra Costa: $2,011 – off 1.9% in a year but up 6%.

San Bernardino: $1,397 – off 1.3% in a year but up 8%.

Ventura: $1,939 – off 1.1% in a year but up 9%.

Los Angeles: $1,821 – off 0.8% in a year but up 11%.

Orange: $2,135 – off 0.6% in a year but up 13%.

Santa Clara: $2,539 – off 0.2% in a year but up 13%.

Fresno: $1,011 – flat in a year and up 3%.

San Diego: $1,949 – up 0.3% in a year and up 15%.

Extra options

Renters got some negotiating leverage last year with numerous landlords stuck with more empty units.

Yes, only 5% of California units were vacant in 2023 – the seventh-fewest among the 42 states and DC tracked for occupancy patterns by ApartmentList.

Nationally, vacancies ran at 6.3% with the most empty units in Utah (8%), Louisiana (7.8%), Idaho (7.7%), and Texas (7.6%). Florida was No. 18 at 6.2%.

But renter options expanded last year. The California vacancy rate grew by a 1.1 percentage-point increase, though, it was slightly smaller than the 1.3-point uptick nationally.

One reason for the added supply: landlord’s construction plans surged.

California ranked No. 3 among the 50 states and D.C. with 110,750 permits for multifamily units in the year ending in November, according to Census Bureau stats. The fastest multifamily permitting was found in Texas with 222,000 units and Florida with 191,000.

That was far more permitting than was previously seen this century.

California was up 31% vs. its average pace since 2000. But that growth trailed the 42% jump across the US. The largest permitting surges were in Idaho at 165%, Arizona at 155% and South Dakota at 143%. Texas was No. 16, up 62%, and Florida, No. 15 at 63%.

Bottom line

This year starts with the most renter-friendly market conditions in the Golden State since 2021’s first quarter.

Though, it’s by no means some grand “renter’s market,” if you look at just fourth-quarter stats. California rents were falling at a 2% annual rate as vacancies were up to 5.2%.

These patterns align with industry chatter that landlords will be focusing on keeping customers in 2024. So your current landlord might be in a generous mood when the lease is up because other property owners might be inducing you to move.

Note the “might” in that forecast.

Jonathan Lansner is the business columnist for the Southern California News Group. He can be reached at jlansner@scng.com

Source: Orange County Register