By Jorge Casuso

January 4, 2024 -- Rents in Santa Monica dropped -4.2 percent last year, after seeing steep rises over the previous two years, according to the latest monthly report by Apartment List.

A -3.5 percent drop in median rent last month, following a -1.7 percent decrease in November, erased a three month-rise between August and October that defied an early seasonal cool-down nationwide.

"The recent declines are in line with the rental market’s typical seasonal pattern, as fewer renters are looking to move at this time of year," the report said.

The report adds that "this year’s dip has been a bit sharper than what we normally see," resulting in "slightly cheaper" rents than a year ago.

Santa Monica's -4.2 percent drop over the past 12 months was steeper than the -1.7 percent decrease in California and -1 percent dip nationwide, according to the data.

Currently, the overall median rent in Santa Monica stands at $2,605, based on listings posted on the popular rental website.

That's still 20 percent higher than the $2,170 median rent for the LA metro region based on the 24 cities in LA and Orange counties included in the report.

Newport Beach is now the most expensive city in the region, with a median rent of $3,193. (Marina del Rey, which had a median rent of $4,678 in November, was one of four cities dropped from the latest report.)

Long Beach continued to have the lowest rents in the region, with a median rent of $1,737.

Nationwide, the downward trend in rental prices began in June, when year-over-year rent growth "fell to zero for the first time since the early stages of the pandemic," according to the report.

It has remained "in negative territory" for seven consecutive months.

The slowdown comes after rents skyrocketed in 2021 and 2022, with Santa Monica seeing median rents jump 12.6 percent and 7.3 respectively.

"The price fluctuations that have rocked the rental market over the past three years are largely attributable to changes in the balance between the number of vacant apartments available and the number of renters looking to move into them," the report said.

"Early in the pandemic, the Apartment List Vacancy Index rose to 6.8 percent as many Americans consolidated households and moved in with family amid large job losses and economic uncertainty.

"Then, a suddenly-tight rental market drove rapid rent growth in 2021 and 2022 as more households were competing for a dwindling supply of vacant units," according to the report.

Apartment List researchers predict rents are "likely to fall for at least one more month before rebounding in line with the market’s typical seasonality."

Rental rates in the longer term are harder to predict, according to the report.

"A robust construction pipeline should drive strong supply growth throughout 2024," the report said. "On the other hand, the extent to which demand rebounds or remains sluggish will likely depend on broader macroeconomic conditions."

Apartment List Rent Report data are drawn monthly from the millions of listings on the site, according to the website.

The report calculates one-bedroom and two-bedroom rents and "aims to identify transacted rent prices, as opposed to the listed rent prices." To view the full report click here.