Southern Markets Saw Rent Declines In 15 Out Of 21 Cities. Here's What They Did Right (And Wrong)

Rents are finally easing in parts of the South, offering a bit of a break to renters who have been feeling the squeeze over the past few years. Southern and Sun Belt cities have been a magnet for new development and saw rents drop in 15 out of 21 major markets this past year. While this shift brings some relief, it's important to understand what these cities got right – and where they fell short.

Don't Miss:

The Building Boom and Rent Declines

One of the main reasons for the dip in rents is that Southern cities have been undergoing significant construction. Over the last five years, about two-thirds or 67% of all new apartment units across the U.S. were built in the Sun Belt. Cities like Dallas, Phoenix, Raleigh, Charlotte, Nashville and Austin have led the way , according to real estate analytics firm CoStar. With so many new units coming online, especially in places with fewer restrictions on construction, it's no surprise that rents have started to level off. In fact, rents fell by an average of 1.4% in Southern markets over the last year, while other regions saw increases, per Harvard’s Joint Center for Housing Studies .

This surge in construction was fueled by looser land-use laws and a relatively friendly regulatory environment, making it easier for developers to build. Thus, Southern cities flooded the market with about 500,000 units this year alone, helping curb rent growth.

See Also: This Jeff Bezos-backed startup will allow you to become a landlord in just 10 minutes, with minimum investments as low as $100 for properties like the Byer House from Stranger Things.

While the increase in new apartments has helped cool rent prices , it hasn't completely solved affordability problems. One major issue is that most new units are luxury apartments. Rising land, materials and labor costs mean developers focus on high-end projects, leaving fewer options for people who need mid-priced or affordable rentals. As Jay Lybik from CoStar pointed out to Business Insider, developers are "building at the top end of the price point," which limits the availability of more affordable housing.

For renters in booming Sun Belt cities, even though rents have dropped slightly, they're still much higher than before the pandemic. In fact, average rent in Southern cities has jumped 33% from October 2019 to October 2024. And if you're looking for an affordable place, you might need to head to the outskirts – those areas where more budget-friendly apartments are being built.