Every new year brings with it potential and possibility, as well as the inevitable—for instance, rental renewals. While the renewal of your rental agreement itself is a fairly predictable part of any new year, one aspect that isn’t so predictable is whether or not your rent will increase.
Fortunately, we’re here to help. Will rent go down in 2023? While we can’t predict the future, we can look at the recent rise in rents over the past few years, the recent increase in apartment buildings, and other important societal factors to give you a better idea of what you might be able to expect when it comes to rent increases in 2023.
Why Have Rents Increased So Much Recently?
The question “What is a normal rent increase?” is one with an answer that varies wildly from year to year and city to city (so the average rent in NYC is different from the average rent in Los Angeles). Case in point: Over the past two years, rents have increased substantially due to the aftermath of the pandemic and general economic unrest. In particular:
- Inflation has caused many landlords to raise rents in order to cover the costs of owning and maintaining their buildings.1
- While landlords primarily cite inflation as their reason for increasing rent price, 80% also said rising rental prices among other homes in their area influenced their decision.1
- The end of quarantine caused an increased demand for rental units from people who no longer wanted to live with their parents, significant others, or roommates.2
- Increases in the cost of home ownership has deterred many people from looking into buying options, further adding to the pool of renters.2
The good news is that experts believe those frightening rates may be behind us, and increases might not continue skyrocketing into 2023.
Why Rent Increases Might Slow Down in 2023
It’s natural to worry about the annual rent increase. So, what factors would cause monthly rent hikes to slow in 2023?
First, there’s been a sizable increase in the number of apartment buildings nationwide.3 In fact, over 400,000 new units were built last year,3 and 2023 is set to see the highest number of new units constructed since 1986.3 This means the uneven supply and demand of apartment units from recent years might begin to balance out.
Additionally, concerns of an impending recession could keep rates down. While most landlords in a recent survey said they still plan to raise rent prices this year, the percentage planning to increase rates over 10% dropped from 25.4% last year to 18.3% this year—meaning that your rent increase could be small.1
Keep in mind, however, that increases last year were still 1.5 times that of pre-pandemic numbers, and many renters have already felt the effects of these price hikes.1
What is a Normal Increase in Rent for 2023?
The rent hike for 2023 will depend on a number of factors, but Realtor.com has experts putting the average rental increase at 3% across the board. This is about half the increase seen in 2022.3
Specific circumstances in your neighborhood could cause the average increase to be higher or lower than the national average. Here are a few factors to consider:
- Availability of rental housing in your area/new units built last year
- Whether you live in an urban or suburban area
- State and city laws that dictate legal increases
- Increased property taxes in your area
- Changes in building ownership
What You Can Do if Your Rent Increase is Too High
If you’re given a renewal offer this year with a rent increase that’s out of your budget, you have a couple of options.
Negotiate a Rent Increase
While the majority of landlords claim they’re not likely to negotiate with tenants, a 2022 Realtor.com survey found that landlords are more likely to negotiate with current tenants over new tenants.1 This means the odds might be in your favor if you stay and try to negotiate versus trying to negotiate with a new building.
Experts consulted by the New York Times offer these tips to renters who’d like to negotiate:4
- Try to find out about the incoming rates early, then gather data on current market prices to help you argue your case.
- Remind your landlord that your move-out would cost them resources, and that they’re better off keeping the same occupants.
- Look for compromises. If your landlord won’t decrease the average rent, you could try asking for other fees to be waived, extra amenities, or a longer lease this time around to keep the new price from going up again in 12 months.
- Remember to be professional and respectful during these conversations.
Research More Reasonably-Priced Housing Options
If negotiations go nowhere, or you’re just plain ready to leave, do your research. Check out available units in your area and remember to factor in moving costs.
If studio or one-bedroom units in your neighborhood have increased their rates beyond your grasp, finding a roommate might be a helpful move—two-bedroom apartments have reportedly seen slower rent price increases.5
Rent Increases Got You Down? Common Can Pick You Back Up
If you’re tired of dealing with increasingly expensive rents, Common could be your solution.
At Common, we believe you shouldn’t have to sacrifice your wallet or your comfort to live in the city of your dreams, whether that’s New York City, Jersey City, San Francisco, South Florida, and beyond. That’s why we offer attainable, comfortable, and fully-furnished coliving spaces in many of America’s most popular cities, alongside a host of incredible amenities like regular housekeeping services and high-speed WiFi.
Stop dealing with the unpredictability of standard apartments and their costs. Explore our homes across the city, and see how you can start enjoying your life in the city with Common.
Sources:
- Forbes. Rental Price Slows to the Lowest Level in 18 Months. https://www.forbes.com/sites/brendarichardson/2022/11/18/rental-price-growth-slows-to-the-lowest-level-in-18-months/?sh=5071b03e738e
- Washington Post. Inflation: Four reasons your rent is going up. https://www.washingtonpost.com/business/2022/02/10/rent-rising-inflation-housing/
- Realtor. Apartment Rent Growth Set to Keep Slowing This Year. https://www.realtor.com/news/trends/apartment-rent-growth-set-to-keep-slowing-this-year/
- New York Times. How to Negotiate Your Rent (Which Is Probably Going Up). https://www.nytimes.com/2022/03/05/realestate/rent-negotiation-tips.html
- CNBC. Rent prices will keep going up in 2023—here’s what to expect. https://www.cnbc.com/2022/09/28/how-much-higher-rent-will-go-in-2023-according-to-experts.html
- Business Insider. Rents are starting to fall across the US — and they’re set to drop even more in 2023. https://www.businessinsider.com/when-will-rents-fall-keep-going-down-housing-outlook-2022-10