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Rent Comes Down for the Wealthy, While Rising for the Rest

February 07, 2024

Landlords are slashing rents this year. Most renters won’t save a dime.

At penthouse apartments and sprawling single-family homes, property owners are offering big discounts and move-in deals to keep units full. These price cuts follow the largest wave of apartment construction in decades. 

Houses in Austin that rented for $5,000 or $8,000 a month now lease for as much as 20% off. In Chicago, some amenity-packed apartment towers with a new building smell offer months of free rent. 

The surplus of new housing is driving down prices at the top of the market, which is reflected in the nationwide rental figures. Overall, U.S. rents grew by just 0.3% in 2023, the slowest rent growth since 2010, according to property data firm Yardi Matrix. Other measures show rents have already started to decline.

Apartment completions expected in 2024, share of existing inventory
Source: Marcus & Millichap Research Services

But high-end rent cuts mask how much the cost continues to rise to lease less-lofty residences. Rents at middle- and lower-tier apartments were up about 2% nationally in December, compared with a year earlier, according to Yardi, which tracks prices for a cohort of tenants it calls “renters by necessity.” 

That is down from the double-digit rent increases seen during the pandemic, but rents are still running some 20% higher than they were in 2020, according to several metrics.

Steady demand, especially at middle and lower price points, continues to support rent growth, analysts said. But with construction and labor costs high, relatively little of new rental supply targets lower tiers of the market, so those renters are less likely to be on the receiving end of price cuts....

cont. In a handful of Sunbelt cities with high rates of construction, including Austin, rents for nonluxury housing are also beginning to go down, just not by as much as their high-end counterparts, both Yardi and Costar data show. In Phoenix, some apartments that rent for $1,500 a month—about the average rent there—now advertise concessions.

“New supply doesn’t necessarily lower rents in middle and lower-end buildings,” said Greg Willett, a multifamily analyst at Institutional Property Advisors, a division of property brokerage Marcus & Millichap. “But the new additions do slow price increases.”

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About Institutional Property Advisors (IPA)

Institutional Property Advisors (IPA) is a division of Marcus & Millichap (NYSE: MMI), a leading commercial real estate services firm in North America. IPA’s combination of real estate investment and capital markets expertise, industry-leading technology, and acclaimed research offer customized solutions for the acquisition, disposition and financing of institutional properties and portfolios. For more information, please visit

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