New Study Shows California Has 7 of the 10 Most Expensive US Rental Markets

ApartmentList conducted an analysis to measure the rent increases during the pandemic era by looking at what new tenants are paying. They compared rental averages in California and across the nation for July through September 2023 with similar summer months in 2019, and they considered various unit sizes.

What the study found: During the summer of 2023, rental prices in California averaged $1,958 per month, ranking as the second highest in the nation after Hawaii. This reflected a 14% increase compared to the period from July to September 2019. 

In contrast, the average rent for a typical US tenant was $1,369, marking a 21% increase during the same timeframe. Consequently, this disparity meant that California tenants were paying 43% more than the national average, which is a notable decrease from the 52% premium observed four years ago. To put it in perspective, being a renter in the Golden State costs an additional $589 per month, amounting to approximately $7,000 more annually.

The California situation: California displays a varied market landscape, with 38 cities exhibiting rent increases surpassing the national average over the past four years. This trend is mainly attributed to areas experiencing a surge in population as individuals relocated from more densely populated regions in Southern California.

ApartmentList reported that among the 324 U.S. counties in the scope of their study, seven of the ten most costly ones were situated in California, including Orange, Santa Clara, Ventura, and Santa Barbara.

Conversely, based on this rental analysis, eight cities in California experienced decreases in rental prices since 2019. The most significant declines were noted in the Bay Area: Oakland ($1,571, down 19%), San Francisco ($2,203, down 16%), and Mountain View ($2,504, down 8%).

The reason behind this phenomenon: Rental costs surged at the national level over three and a half years ago, especially when numerous remote workers transitioned to larger apartment units in different areas. However, the analysis shows that rental demand declined in many markets as the market continued to evolve this year.

The gradual decline in the state's population and limited efforts in home construction might have contributed to a moderation in rent inflation. Additionally, the implementation of various government-mandated rent caps has restricted the amount landlords can charge. Moreover, additional pricing constraints were introduced during the pandemic.