California Forced to Drop Rent Prices Amid Exodus

Some of the major cities in California saw rental prices plunge amid declining demand as the areas saw population losses, according to the rental online platform Zumper.

Oakland saw rent plunge more than 9 percent in May, followed by Sacramento, which recorded an 8 percent drop compared to the same time a year ago. Overall, seven of the 11 California cities that Zumper looked showed a drop in May.

On the other side, Syracuse, New York, and Columbus, Ohio, saw two of the highest rent increases. Syracuse saw rent soar nearly 29 percent, while Columbus recorded a jump of 22.5 percent.

The trend in California went against how the rental market performed at the national level. Zumper’s national rent index reported that one-bedroom homes saw median prices go up more than 1 percent to a little over $1,500. Two-bedroom properties saw prices jump to close to $1,900, which was also a more than a 1 percent increase.

Part of the explanation behind the falling of rent prices in the Golden State is a dwindling number of people living in cities. The departure of people in places like San Francisco reduced demand for properties, which in turn has pushed down prices.

The Bay Area of San Francisco-Oakland-Fremont saw the number of residents fall by nearly 4 percent from 2020 to 2023, according to an analysis of U.S. Census figures by the data analysis firm RealPage. The Los Angeles-Long Beach-Anaheim area lost close to 3 percent of its population, followed by San Jose-Sunnyvale-Santa Clara, which saw its number of residents fall by 2.5 percent during the same period.

“It seems that it is less of a supply factor that is driving rents down in California right now, which is what’s happening in many other U.S. markets and especially in the Sun Belt area, but more of a demand one,” Zumper said. “Of the top 50 largest markets, the Bay Area and the Los Angeles metro area have seen some of the largest population losses in the last few years.”

Newsweek contacted Zumper via email for comment on Tuesday.

Zumper also pointed out that some California cities are struggling to recover the jobs they lost during the COVID-19 pandemic. Los Angeles has 60,000 fewer jobs right now than it did before the coronavirus hit and led to strict lockdowns that forced businesses to lay off employees.

San Francisco has 45,000 fewer jobs than before the COVID-induced economic crisis. Meanwhile, California’s 5.3 percent unemployment rate is 1 percentage point higher than the national rate, contributing to a struggling rental market in the state, according to Zumper.