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Incomes Begin to Outpace Rents — A Positive Shift
The newest Zillow October Rent Report offers one of the clearest pictures we’ve seen all year: rent growth is slowing, incomes are finally catching up, and concessions are at a record high. For renters, this is welcome relief. For owners and operators, it signals a market in transition — not a downturn — and one that disciplined investors like us can navigate effectively.
Rent Growth Slows to 2.3% While Incomes Rise 4%
According to Zillow, typical asking rents rose 2.3% year-over-year in October, while median household incomes increased 4% over the same period. In 37 of the 50 largest metros, incomes grew faster than rents — a meaningful shift from the post-pandemic years, when rent increases far outpaced wage growth.
That dynamic has eased affordability pressures for many households, even if rents remain elevated. Zillow estimates that a median-income renter now spends 27.2% of income on housing. That’s an improvement from last year, but still above the 26.3% pre-pandemic level, showing the market may have more room to normalize.
Where Rents Are Falling
Some previously overheated markets are now seeing real rent declines:
Austin: –3.1%
Denver: –2.1%
San Antonio: –0.8%
Phoenix: –0.7%
These markets are absorbing a significant wave of new supply, allowing renters to regain some bargaining power. Even markets with positive rent growth — like San Jose — have become more affordable as incomes outpace rents.
But nationally, rents remain high. Zillow notes the typical asking rent is now $1,949, up 35.6% since before the pandemic — well above the 26% rise in the overall cost of living over the same period.
Concessions Hit an All-Time High
With a large volume of new multifamily deliveries finally hitting the market, landlords are increasingly using concessions to remain competitive. Zillow reports that 39% of all rental listings now include a concession — an all-time high for October.
In 14 major metros, more than half of all listings offer concessions, including:
Dallas (60.5%), Atlanta (56%), Washington D.C. (56.5%), Phoenix (57%), Denver (67.5%), Austin (62%), Las Vegas (51.3%), Nashville (63%), Charlotte (62.5%), Raleigh (63.7%), Orlando (51.7%), San Antonio (54.4%), Seattle (54.3%), and Salt Lake City (61%).
This is exactly what we expect in a supply-heavy environment — a short-term adjustment period where rent growth moderates, occupancy firms up, and operators lean on incentives to maintain traffic.
Our Take: A Healthy Reset Before the Next Phase
At CALCAP, we view this moment as a cycle reset. Affordability is improving, households are rebalancing, and supply is finally catching up after years of underbuilding. These are constructive signals for long-term operators.
Yes, concessions will remain elevated in the near term, especially in high-delivery markets. But as supply moderates in 2026 and job growth remains steady, we expect absorption to continue, rent growth to normalize, and fundamentals to stabilize.
This environment creates selective opportunities for buyers like us. When rents cool, incomes rise, and concessions peak, motivated sellers emerge. Those are exactly the moments where long-term value is created.
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