It's been an interesting few months in the rental market. The never ending trend of higher and higher rents was finally broken at the end of last year, which was followed by a precipitous drop in prices (13%-20%). Incentives picked up substantially- no fee, free month (s), and even lease terms that include a legal break of the lease in case of unemployment, stimulated the market.
So where do we stand now? I see a couple of trends that are taking hold.
First, there is plenty of downsizing, economizing, and trading down. In other words, many people who are paying $6500 per month in rent are looking to rent for $4500, the $3500 1 bedroom renters are looking for upper $2,000's, and so on.
Second, prices may have fallen off the table, but they are now stabilizing. The incentives remain, but the overall vacancy rate, while higher seems to have slowed it's increase. I don't think this will last for all segments of the market. My most striking observation is that there is an absolute glut of 1 bedroom apartments on the market, while two bedroom availability seems to be at traditional levels. In some buildings where 1 bedroom vacancies are usually rare, I am seeing 8, 10, even 12 vacant 1 bedrooms. In the same buildings, 2 bedrooms are much harder to come by.
So, looking forward, 1 bedroom prices will likely continue to fall, while studios, two bedrooms and larger are likely to stay stable. Of course, it has been an unusually volatile winter, so stay tuned, the real turnover happens in the spring/summer season.