Rent prices in several major cities in California, including Oakland, San Jose, San Diego, and San Francisco, have seen a decline between 2023 and 2024. This trend is a relief for renters in these expensive metropolitan areas, with Oakland experiencing the biggest annual rent decline of all California cities at -9.1 percent. Other cities like Sacramento, Los Angeles, San Jose, San Francisco, San Diego, and Long Beach also reported rent decreases during this period. Despite this decline in rent prices, three California cities—San Jose, San Diego, and San Francisco—were among the most expensive large metropolitan areas for renters in the country.
Data analysis from the U.S. Department of Housing and Urban Development and the U.S. Census Bureau revealed that San Jose-Sunnyvale-Santa Clara was the most expensive large metropolitan area in the U.S. for renters, with an annual median rent of $3,451. Other California cities like San Diego, San Francisco, and Los Angeles also ranked among the top four most expensive metros at the time of the analysis. Nationally, rent prices are increasing, with the national rent index for May showing a rise in median prices for one- and two-bedroom apartments. However, the decline in rent prices in California cities is attributed to a drop in demand rather than a supply factor, as seen in other U.S. markets, especially in the Sun Belt area.
The decline in demand for rental properties in California cities has been a significant factor in the decrease in rent prices. The experts at Zumper suggest that cities like San Francisco and Los Angeles have seen significant population losses in recent years, with both cities struggling to recover from the job losses experienced during the pandemic. California’s unemployment rate was the highest of all states in April, further demonstrating the economic challenges facing the state. Cities like San Diego and Sacramento are also facing their own struggles, with San Diego reporting the worst demand performance among the country’s 150 largest apartment markets in Q4 2023 and Sacramento struggling with low occupancy rates amid supply-side pressure.
Overall, the decline in rent prices in several major California cities is a positive development for renters in these expensive metropolitan areas. The drop in demand, combined with economic challenges and population losses, has contributed to the decrease in rent prices. Despite this trend, California cities like San Jose, San Diego, and San Francisco remain among the most expensive metros in the country for renters. The national rent index shows an overall increase in rent prices, highlighting the unique situation playing out in California’s rental market. As cities continue to navigate through economic challenges and recovery from the pandemic, the rental market in California and across the country is likely to see continued changes in the coming months.
