Topic: I have a silly question. With the way the rent prices have gone up, is there a history of rent prices actually decreasing?

I have a silly question. I recognize that it’s silly, but serious answers only please . With the way the rent prices have gone up with inflation. Like house prices, is there a history of rent prices actually decreasing? I am new-ISH to the industry as an administrative assistant.

Everyone keeps telling me they're just gonna keep going up. The problem I see is that especially in my area the vast majority of people that live here are not able to afford rent here anymore. What happens when there's no one that can afford the apartments anymore?

I had the same thought. I have had rent increases so high that residents can longer qualify for rent relief because they are over 150% FMR. Therefore unable to pay rent in their current unit and cannot afford to go elsewhere because of the inflation of the market.

In 2008 the market crashed. People (and investors) were upside down on loans and the prices of everything plummeted. Market completely crashed.

Rents going down. Yes in 1988, 1994, 2008. In 2008 a house that normally rented fir 1350 was dropped to 950.00
There is relationship with house prices, interest rates, building costs, land costs etc.
There have been times when beautiful new construction was cheaper than a 10 yr building next door. New construction got a hud loan at a rate half of ours bank loan.
Our new construction houses basis is our cost at 450,000
And renal value Is 3000.00/mo. Market value of the house is 590,000. No need to beat me up. This is our experience. Every person and region and town has their own

Rent and mortgages have 7 to 10 year cycles ~ they go up, they go down. However the do not go down as far as they were. Renting used to be for the poor or until you could buy a house. Then there was a mind shift, folks actually like living in an apartment. We have a supply issue right now. And housing prices are WAY up. More folks want apartments ~~ there is no supply ~~ raise the rent ~~ because they can. It is about the bottom line for the owners. Here's a couple of interesting articles about rent~ www.census.gov/.../time.../dec/coh-grossrents.html

Back in 2010 we (community)were desperate. Actually going down on renewals. Cheaper to keep em. Had one apt sit vacant for over a year

I have ppl even now that are paying larger rental rates. The market conditions aren't guaranteed. 2020 one unit gave it away for 799 they moved out new is paying 1050 plus. We also aren't doing 25 increases more on the higher side to get them caught up to current rent schedule. But guess depends on where you are located.

When I started in the industry in 2008 rents were tanking and the owners of that property had just done a ton of value add. They kept trying to push and occupancy ended up in the 80’s. Once they went with the flow I got some leases finally lol.

New construction can add competition if it outpaces inventory demand.

In 31 years I reduced once. And that was the pandemic.

Sure than can go down. If vacancies increase and empty units can’t be rented for the old market rent. The rent is lowered until they get leased up.

Yes. Rents do come down. It may be in the form of concessions but it happens. Houston 2015 is a great example. Bay Area 2020.

Here’s another perspective - as people get priced out of house purchasing, they will be driving more demand for renting apartments. Also operations are costing us so much more it’s hard to imagine lowering rates and breaking even if operating expenses continue to rise or even maintain.’

I’ve never seen prices go down. Prices go up every year and are outpacing inflation by a lot. Most residents expect a $25-50 increase every year as they understand that costs increase for included services and upkeep of amenities.

Not on renewal. They may hold flat if new lease rents decrease, but rents don't typically go down upon renewal.

They do at times go down. As an example, ours dropped pretty dramatically during the heart of COVID and as a result, the increases we're seeing now are really a return to normalcy. They will level off to a degree and then outside influences can cause them to drop. Every market is different.

I've had rents go down on renewal. If you set your renewal prices at market rent and the market rent goes down, the renewal goes down. This is rare and only happens in a weak market, which I've been through, where an apartment sits vacant-ready for weeks before somebody rents it.

One of my favorite memories while working for my dad managing his apartments was when he paid off the mortgage on one of his 18-unit buildings and he let me write a rent reduction letter to all the tenants! It was so fun.

In the apartment industry we refer to that as a concessionary market. The market rent doesn't drop but the actual rent is adjusted downward using concessions. (1 month free for example, pro-rated over the life of the lease). We were offering the same concessions to existing residents as new residents in 2008 and on until the market recovered allowing for stabilized occupancy of 95% or above, reducing turnover to aid the recovery.

In 2008 there was also a supply/demand issue where the market was flooded with too many homes on the market. This seemd to also affect the rental rates and people were so afraid of the economy in general, that they were afraid to move.

What they said ^^! In mid 2006 market was peaked high like it is now. By 2008 all the people who overextended themselves by having no choice to rent/buy above their means bailed/skipped/moved back home and people slowed migrating to Florida but apartments were all underwritten/refinanced at such high rates they used concessions to avoid “lowering the rent roll” but they got so out of hand, 2-2.5 months free… and then there was no control to stop it in the market so it lasted too long to get value back to true rent roll starting point. Curious to see if it’s handled better this time around with many sites on revenue management programs if property owners permit it to “do it’s thing” and react when demand starts to slow or if the concession game is inevitably returning! Hope it’s not the latter

You won't see them go down really, but you will see them level out and stabilize. I remember a stretch of time with lease renewal seasons with no increases and money off concession bonus if they renewed by a certain time. I have see a lot of concessions they were not and upfront concession but spread out over the lease term to "reduce the rent".