{"id":177561,"date":"2024-09-17T07:05:00","date_gmt":"2024-09-17T13:05:00","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=177561"},"modified":"2024-09-17T07:02:27","modified_gmt":"2024-09-17T13:02:27","slug":"uncovering-the-patterns-behind-falling-rents-in-sprawling-cities","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/uncovering-the-patterns-behind-falling-rents-in-sprawling-cities","title":{"rendered":"Uncovering the Patterns Behind Falling Rents in Sprawling Cities"},"content":{"rendered":"\n

A recent, excellent BiggerPockets blog post<\/a> identified several cities where rents are expected to fall. Here, I’ll explore what I believe to be the common thread linking these cities.<\/p>\n\n\n\n

Before I continue, I want to explain what drives prices and rents. Both are a function of supply and demand. With more buyers than sellers, prices rise until the number of buyers and sellers reaches equilibrium. Conversely, when more sellers than buyers exist, prices fall until they balance out.<\/p>\n\n\n\n

Rents follow property prices. When prices or interest rates are high, fewer people are willing or able to buy homes, forcing them to rent. The increased demand for rentals drives rents up. <\/p>\n\n\n\n

Conversely, more people buy rather than rent when property prices are low. This decrease in demand results in decreasing rents.<\/p>\n\n\n\n

What Do Cities With Falling Rents Share?<\/h2>\n\n\n\n

The primary reasons for stagnant or declining prices and rents are stagnant or shrinking populations (soft demand) and\/or urban sprawl (unlimited supply). Urban sprawl\u2014the unrestricted expansion of cities\u2014leads to new properties competing with existing ones. <\/p>\n\n\n\n

Existing homes have only a slight price advantage when undeveloped land is cheap. Given a choice between old and new properties, most people opt for new ones, even at a higher cost.<\/p>\n\n\n\n

Here are time-lapse aerial views of five cities mentioned in the post. These views demonstrate how these cities can continue expanding, adding excessive supplies and decreasing rent and prices.<\/p>\n\n\n\n