Ramit Sethi reveals why rent prices are falling | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

I’ve closely followed rising rent prices over the last decade or so, both in my work as a real-estate reporter and as a former renter. The rule of thumb is that prices rise over time, and in most cases, your landlord has the right to increase your rent.

It’s one reason people consider buying a home to be a wise money choice. When you get a mortgage, your monthly payments toward the principal and interest are set. If you continue renting, your monthly rent could increase regularly.

Except now, rent prices are decreasing in many parts of the U.S.

Creative Planning CEO Peter Mallouk recently shared a screenshot on X of Reventure App’s breakdown of the 15 American cities with the largest rent cuts since 2022. The data, originally from Apartment List, showed that rents had fallen in major metros from Aug. 2022 to Feb. 2026.

The metro area with the biggest drop was Austin, Texas, with a 22.2% decrease. Cities such as Phoenix, Atlanta, and Orlando also experienced significant cuts, with percentages in the double digits.

Why have rent prices been decreasing? Ramit Sethi, financial influencer and author of “I Will Teach You to Be Rich,” shared his thoughts on the data.

Sethi said landlords can’t pass their costs down to renters

Sethi reposted Mallouk’s original post on X with a quote. “When I point out that landlords cannot magically pass along their costs to renters, people get VERY mad,” Sethi wrote.

“Below is an example of how landlords can only charge what the market will bear,” he continued, referring to the screenshot Mallouk had shared. “Sometimes they cover their costs. Sometimes not. Often, they don’t even know their own costs!”

People who rent out their homes may get angry when Sethi claims that landlords can’t automatically charge renters more just because their own homeownership costs have increased because, generally, the goal of renting out a home is to make money. It’s viewed as an investment.

Eric Roberge, founder and CEO of financial advisory firm Beyond Your Hammock, agreed that landlords can’t simply calculate their costs, charge more so they make a profit, and decide that’s how much they’re going to charge for rent.

“Landlords obviously have some control over what they charge to rent a particular property, but their costs can easily exceed what they can demand for a rental rate —particularly if we’re talking about ‘accidental landlords,’ or people who bought a home as a primary residence and instead of selling when they were ready to move on, kept ownership and tried to rent out the home,” Roberge told TheStreet.

Some people view this approach to landlording as evil, others as naive. Regardless of the motivation, Apartment List’s latest data showed that it isn’t realistic. A landlord’s costs don’t decide the monthly rent they charge — the housing market does.

Local real estate markets dictate rental prices

What did Sethi mean when he posted that “landlords can only charge what the market will bear?”

The answer is complex (any explanation of the real estate market is), but it can mainly be broken down into two factors: location and supply versus demand.

“Real estate is very, very locally based,” Roberge said. “For example, the Boston market is NOT the same as the Cambridge market which is again different from the Somerville market… even though you might be talking about a difference of a mile or two in physical distance.”

If a landlord with a house on the outskirts of Boston charges as though it’s in downtown Boston, potential renters will probably search for a different property.

More on real estate and the housing market:

Just because a landlord might have a cost of $5,000 per month on a property between its mortgage, property tax rate (which is higher if you don’t live in the property as a primary residence, which landlords are not), and the ongoing cost of maintenance/repairs does not mean they can charge $8,000 per month and get a tenant willing to pay this amount,” Roberge said.

However, Roberge explained that a landlord may be able to charge $8,000 monthly if the rental demand is high in their local market and there is low inventory. It’s also a more realistic price if the area’s main industries provide high-paying jobs.

“The housing cost is going to rise to stay relative with people’s incomes,” Roberge said.

More multifamily housing construction leads to lower rents

When a lot of people are looking to rent in an area, demand might exceed supply. In this case, landlords can get away with charging higher monthly rents. It’s the same with buying a home: If there are more potential homebuyers than properties for sale, houses are more expensive.

But rental construction increased in 2024 and early 2025. An Apartments.com study revealed that because more multifamily construction in certain metro areas translated to more units for people to rent, the higher supply resulted in lower rent prices.

The cities recorded by Apartment List with the most significant rent decreases have also experienced some of the most rapid construction over the last few years.

Multifamily housing construction is slowing down now, according to Apartments.com, so rent prices could bounce back later. But for now, renters in cities like Austin and Phoenix are still enjoying the aftereffects of the previous construction boom.