Charlotte area rent is falling faster than most places in the US, report shows. But why?

Charlotte’s rent prices are among some of the fastest falling in the country, a new realtor.com report showed .

The median rent price in the Charlotte metro area dropped by 5.2% from June of last year to this past June, according to the report. The city’s rents have declined the sixth most of any major metro in the country.

The report looks at one- and two-bedroom rental units, such as apartments, condos, townhomes and single-family homes. Austin, Texas, saw the steepest year-over-year rent decline in the country, at 9.5%.

Charlotte rents are now $189 higher than in pre-pandemic June 2019 . That still beats Raleigh and the U.S. rates, which have median rents that are $355 and $369.50 higher than June 2019 levels, respectively.

What’s impacting Charlotte rents?

An increase in rental supply is one of the primary factors driving the city’s rent decline, according to Jiayi Xu, an economist at realtor.com.

That makes sense to Nancy Braun, owner of Charlotte-based Showcase Realty . She said that apartment construction in Charlotte spiked during the pandemic and that you “could hit almost any corner in Charlotte and see a new apartment building.”

Now, most of those apartments and other rental sites are available, Braun said. This heightened supply creates competition among rental properties, forcing owners to lower their rents.

“They need tenants in there, otherwise they could default on their loans,” Braun said. “So they’re probably offering a lot of good deals.”

Before the pandemic, investors noticed an influx of people to the Carolinas along with a housing shortage in Charlotte, Braun said.

“What’s your best use of that plot of land that you’re spending millions on?” she asked. “You can get a lot more return on your investment if you do a 20-story apartment building than putting two houses on that piece of land.”

And Census Bureau construction data show Charlotte is one of the leading markets in issuing permits for new multi-family homes, Xu said.

Charlotte’s rents have declined on a year-over-year basis for 15 consecutive months. Xu said she’s observed this trend across the Southeast in metros such as Nashville, Tennessee, Miami and Tampa Bay, Florida.

Affordability still an issue

Despite Charlotte’s lower rents, affordability remains an issue.

In June, Charlotte’s median rent was $1,527 compared to $1,338 in June 2019. That extra $189 is approximately 2.9% of a typical Charlotte household’s monthly gross income, Xu said.

This increase forces Charlotteans to spend more of their income on housing after the pandemic, Braun said. Incomes haven’t increased enough to offset the increase in the cost of housing and other expenses, Braun said.

“Renters are struggling,” she said. “It’s taking a big chunk out of their spending power.”