Is California’s Rent Finally Cooling? What Renters and Property Owners Need to Know

Jul 10

Written By Jeff Lambino

After nearly two years of declines across the national rental market, May 2025 brought yet another dip—median rent for 0–2 bedroom units in the U.S. dropped 1.7% year-over-year. But in California, the picture is more nuanced.

For renters, some relief may be emerging. For property owners, the pressure to adapt is growing. Whether you're signing a lease or managing a portfolio, here’s what the latest trends mean for you.

What’s Driving the Shift?

1. Fewer International Renters in Tech Hubs
New federal policies are tightening access for international students and skilled workers. Cities like San Jose, San Francisco, and parts of Los Angeles—which rely heavily on this renter population—may see softening demand, particularly around university zones and tech corridors.

For Renters: Expect more incentives, from rent discounts to flexible terms, especially in areas near campuses or corporate parks.
For Owners: Pay closer attention to vacancy risk and consider short-term improvements to compete more aggressively for domestic tenants.

2. Inland Markets Stay Competitive
Regions like Sacramento, Riverside, and Bakersfield continue to absorb renters priced out of the coast. These markets haven’t seen the same level of rent decline thanks to strong migration patterns and limited housing stock.

For Renters: Prices may not fall sharply here—but availability could improve as new developments come online.
For Owners: These markets still hold pricing power, but rising expectations around amenities and service mean that tenant satisfaction matters more than ever.

3. Construction Slowdowns Will Affect Supply
National tariffs on imported construction materials—including a 50% tax on steel and aluminum—are pushing up costs and delaying timelines. That’s bad news for housing supply in cities already struggling to build enough.

For Renters: Supply constraints could limit long-term affordability gains, especially for larger or newer units.
For Owners: Development delays may support your property’s value, but long-term rent growth depends on staying competitive in a slower-moving market.

What You Can Expect

Renters: While average rents are flattening, not all neighborhoods are seeing price drops. If you're relocating, shop around. Some submarkets—especially tech-adjacent areas—are more negotiable than others.
Owners: This is a critical year to retain tenants and improve operational efficiency. Rent growth is no longer automatic—successful leasing now depends on data, responsiveness, and positioning.

California’s rental market is not collapsing—it’s recalibrating. For renters, that may mean more options and fewer bidding wars. For owners, it means shifting from passive gains to proactive strategy.

Whether you’re renewing a lease or managing multiple doors, understanding these changes will help you stay ahead in a market where nothing is standing still for long.

Jeff Lambino

Is California’s Rent Finally Cooling? What Renters and Property Owners Need to Know

After nearly two years of declines across the national rental market, May 2025 brought yet another dip—median rent for 0–2 bedroom units in the U.S. dropped 1.7% year-over-year. But in California, the picture is more nuanced.

For renters, some relief may be emerging. For property owners, the pressure to adapt is growing. Whether you're signing a lease or managing a portfolio, here’s what the latest trends mean for you.

What’s Driving the Shift?

For Renters: Expect more incentives, from rent discounts to flexible terms, especially in areas near campuses or corporate parks.

For Owners: Pay closer attention to vacancy risk and consider short-term improvements to compete more aggressively for domestic tenants.

2. Inland Markets Stay Competitive
Regions like Sacramento, Riverside, and Bakersfield continue to absorb renters priced out of the coast. These markets haven’t seen the same level of rent decline thanks to strong migration patterns and limited housing stock.

For Renters: Prices may not fall sharply here—but availability could improve as new developments come online.

For Owners: These markets still hold pricing power, but rising expectations around amenities and service mean that tenant satisfaction matters more than ever.

3. Construction Slowdowns Will Affect Supply
National tariffs on imported construction materials—including a 50% tax on steel and aluminum—are pushing up costs and delaying timelines. That’s bad news for housing supply in cities already struggling to build enough.

For Renters: Supply constraints could limit long-term affordability gains, especially for larger or newer units.

For Owners: Development delays may support your property’s value, but long-term rent growth depends on staying competitive in a slower-moving market.

What You Can Expect

Renters: While average rents are flattening, not all neighborhoods are seeing price drops. If you're relocating, shop around. Some submarkets—especially tech-adjacent areas—are more negotiable than others.

Owners: This is a critical year to retain tenants and improve operational efficiency. Rent growth is no longer automatic—successful leasing now depends on data, responsiveness, and positioning.

California’s rental market is not collapsing—it’s recalibrating. For renters, that may mean more options and fewer bidding wars. For owners, it means shifting from passive gains to proactive strategy.

Whether you’re renewing a lease or managing multiple doors, understanding these changes will help you stay ahead in a market where nothing is standing still for long.

Is California’s Rent Finally Cooling? What Renters and Property Owners Need to Know

After nearly two years of declines across the national rental market, May 2025 brought yet another dip—median rent for 0–2 bedroom units in the U.S. dropped 1.7% year-over-year. But in California, the picture is more nuanced.

For renters, some relief may be emerging. For property owners, the pressure to adapt is growing. Whether you're signing a lease or managing a portfolio, here’s what the latest trends mean for you.

What’s Driving the Shift?

For Renters: Expect more incentives, from rent discounts to flexible terms, especially in areas near campuses or corporate parks.

For Owners: Pay closer attention to vacancy risk and consider short-term improvements to compete more aggressively for domestic tenants.

2. Inland Markets Stay Competitive Regions like Sacramento, Riverside, and Bakersfield continue to absorb renters priced out of the coast. These markets haven’t seen the same level of rent decline thanks to strong migration patterns and limited housing stock.

For Renters: Prices may not fall sharply here—but availability could improve as new developments come online.

For Owners: These markets still hold pricing power, but rising expectations around amenities and service mean that tenant satisfaction matters more than ever.

3. Construction Slowdowns Will Affect Supply National tariffs on imported construction materials—including a 50% tax on steel and aluminum—are pushing up costs and delaying timelines. That’s bad news for housing supply in cities already struggling to build enough.

For Renters: Supply constraints could limit long-term affordability gains, especially for larger or newer units.

For Owners: Development delays may support your property’s value, but long-term rent growth depends on staying competitive in a slower-moving market.

What You Can Expect

Renters: While average rents are flattening, not all neighborhoods are seeing price drops. If you're relocating, shop around. Some submarkets—especially tech-adjacent areas—are more negotiable than others.

Owners: This is a critical year to retain tenants and improve operational efficiency. Rent growth is no longer automatic—successful leasing now depends on data, responsiveness, and positioning.

California’s rental market is not collapsing—it’s recalibrating. For renters, that may mean more options and fewer bidding wars. For owners, it means shifting from passive gains to proactive strategy.

Whether you’re renewing a lease or managing multiple doors, understanding these changes will help you stay ahead in a market where nothing is standing still for long.

June 2025 California Rental Market Update

2. Inland Markets Stay Competitive
Regions like Sacramento, Riverside, and Bakersfield continue to absorb renters priced out of the coast. These markets haven’t seen the same level of rent decline thanks to strong migration patterns and limited housing stock.

3. Construction Slowdowns Will Affect Supply
National tariffs on imported construction materials—including a 50% tax on steel and aluminum—are pushing up costs and delaying timelines. That’s bad news for housing supply in cities already struggling to build enough.