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Rent Prices City by City

November 16, 2023

USA Rent Prices City by City

The latest rent price reports for the US from Zumper, Census Bureau, Redfin, Rent.com, and Apartmentlist show asking rent prices have flattened and the median rent price growth has slowed.

Their reports reflect an ongoing struggle between the economy, supply shortages and builders who are trying to produce more rental units while interest rates make it financially difficult. This complex struggle affects American cities uniquely, as renters adjust their choices due to affordability challenges.

And while the trend might be good news for renters, high interest rates are quickly slowing apartment construction. The glut of new releases could be absorbed by end of 2024. A calming market suggests rent costs could help lower the CPI.  However, as rates lower in 2024, the risk is a return of demand and even higher rent prices for the years ahead.

Zumper reports the US median rent price for 1 bedroom units fell .4% in October, the highest decline during 2023.  2 bedroom units also fell by .2% to a new median of $1,862.

Median Asking Rents USA History Timeline Chart

Median Asking Rents. Screenshot courtesy of Census.gov

Zumpers CEO Anthemos Georgiades says that year-over-year decreases are likely, “If the current pattern continues, we’ll likely see negative year-over-year growth by the end of winter.”   He pointed out that rental demand remains soft while a record amount of supply is hitting the market and it’s concerning to multifamily developers.

Memphis, Honolulu, Sacramento, Wichita, and Omaha led the list of biggest decreases in rent prices, while Anchorage, New Haven, Des Moines, Baton Rouge, and New York City had the highest increases last month. New York’s rent prices are up an astonishing 9.8% year over year. Also year over year, Newark NJ rents rose 11.2%, Minneapolis was up 20%, and Anchorage was up 17.8% year over year. There’s not much reported on why these cities are seeing such rises, yet population migration, development blockage, and buyer frustration are likely a key part of it.

RedFin Rent Price Report for October 2023

The Zumper predictions are borne out by the latest report from Redfin. Asking rents remain high while growth is slowing. For landlords, the rental market is still very healthy, offering confidence to multifamily developers who have a glut of units to rent.  For builders however, rising vacancies are creating doubt about 2024. They may have to wait for the glut to be absorbed and interest rates to fall.

They report that median U.S. asking rents in October fell 1.6% vs September, and decreased just slightly .3% to $1,978 per month vs last year.  And that is a drop of 3.7% from the record high of $2,054 set in August 2022.

The median asking rent in October is 20.8% above that in October 2019, before the pandemic.

Redfin Rent Report for October.

Redfin Rent Report for October. Screenshot courtesy of Redfin.com

The most recent Census Bureau chart below shows the rapid rise of asking rents as housing supply has fallen and inflation has taken its toll.

Highest Rents in the Major Cities (Zumper Report)

New York City, Jersey City, San Francisco, Miami and Boston once again reigned as having the highest 1 bedroom rents in July.   Despite the overall trends, Zumper points out that large variances exist between neighborhoods in cities.

For instance, Staten Island in New York as a median rent of $1600 while Manhattan rents have soared to $4,200 a month, and NoMad community specifically, rents have hit $6000 per month and in Flatiron District they are $5,900 on average.

Rent Price Growth in USA.

Rent Growth in USA. Screenshot courtesy of Zumper.

 

In its June report, Zillow mentioned a record-high 978,000 multifamily (5+ units in a building) housing units were under construction in May, at a seasonally adjusted annual rate. That’s part of a multiyear boom in apartment releases which may take some time to fill (See latest apartment vacancy rates).  However, our poll of property pros suggests the glut of apartments should be filled by 2025.

Redfin’s report shows the vacancy rate is rising.

Rental Vacancy Rate History Timeline.

Rental Vacancy Rate History Timeline. Screenshot courtesy of Redfin.com

Apartment construction is undergoing a steep decline, and that could regenerate housing shortages for 2024/2025.

Apartment Construction Levels USA.

Apartment Construction Levels USA. Screenshot courtesy of Redfin.

Redfin’s latest report for October shows the median asking rent in the West fell 1.5% to $2,392. In the South, they fell 0.2% to $1,642. Asking rents grew 4.1% to $1,430 in the Midwest while in the Northeast, they rose 3% to $2,463 per month.

Nashville, New Jersey, Atlanta, Denver, and Austin all suffered deterioration in their rental sectors. However, Nashville enjoyed a huge surge of newly constructed apartment supply, and that supply will be occupied soon enough. The quality of life in Nashville can’t be discounted as a drawing factor. It’s a city in growth and is cited as a city that will become a national leader, among other cities in the Sunbelt.  Deteriorating fiscal conditions in northern cities and states are a concern for landlords.  However, New York City prices are among the fastest growing in the nation.

And Redfin reports these highest rent increases in major metros:

  • Raleigh, NC (16.6%)
  • Cleveland, OH (15.3%)
  • Charlotte, NC (13%)
  • Indianapolis, IN (10.5%)
  • Nashville, TN (9.6%)
  • Columbus, OH (9.4%)
  • Kansas City, MO (8.1%)
  • Riverside, CA (7.2%)
  • Denver, CO (7%)
  • St. Louis, MO (4.2%)

 

Highest Rent Prices City by City (courtesy of Zumper)

1 BEDROOM2 BEDROOMS
CityPriceM/M%Y/Y%PriceM/M%Y/Y%
Anchorage, AK$1,3906.10%17.80%$1,6805.00%15.90%
New Haven, CT$1,6405.80%-6.80%$1,9503.70%0.00%
Des Moines, IA$9405.60%6.80%$1,1805.40%15.70%
Baton Rouge, LA$9604.30%7.90%$1,010-4.70%-3.80%
New York, NY$4,2403.90%9.80%$4,7804.40%11.20%
Phoenix, AZ$1,3503.10%-2.20%$1,600-0.60%-5.90%
Colorado Springs, CO$1,1902.60%-0.80%$1,500-1.30%-3.20%
Albuquerque, NM$9502.20%5.60%$1,3202.30%3.90%
Boston, MA$2,9602.10%-3.30%$3,480-0.60%-0.60%
Tulsa, OK$9702.10%2.10%$1,1300.90%4.60%
Anaheim, CA$2,0402.00%4.60%$2,590-0.40%2.40%
Virginia Beach, VA$1,5302.00%7.70%$1,7901.10%11.90%
Santa Ana, CA$2,1001.90%-2.30%$2,780-4.10%0.40%
Atlanta, GA$1,7301.80%3.00%$2,2700.40%1.80%
Rochester, NY$1,1601.80%3.60%$1,4300.70%5.90%
Minneapolis, MN$1,4301.40%20.20%$2,0201.00%21.00%
Baltimore, MD$1,4201.40%9.20%$1,6501.20%3.80%
Austin, TX$1,5501.30%-6.60%$1,9902.10%-5.70%
Syracuse, NY$9701.00%4.30%$1,2300.00%0.80%
Chattanooga, TN$1,3100.80%7.40%$1,500-0.70%7.10%
Jacksonville, FL$1,2800.80%8.50%$1,4600.00%1.40%
Cleveland, OH$1,2600.80%3.30%$1,3100.80%3.10%
Madison, WI$1,4200.70%4.40%$1,7001.20%4.30%
Aurora, CO$1,4000.70%6.10%$1,870-1.60%-2.10%
Gilbert, AZ$1,6900.60%3.00%$1,850-2.60%1.60%

When Will Rent Prices Fall?

As the charts revealed, the home-buying market is being decimated, resulting in more commitment to the rental market by renters and also investors.

It’s difficult to forecast home prices throughout the next 5 years, yet with home construction down, inflation high, and American savings accounts in a strong position, with good employment outlooks, there might be good pressure for rent price rises.

The rental property market looks promising resulting in continuous demand for property management software, property management services, and rental units themselves.

Of recent, the number of renters making rent payments on time has decreased slightly, but overall renters appear to be taking their rent payment responsibilities seriously.

What Causes Rent Prices to Rise?

The key drivers of higher rent prices are:

  1. high real estate prices
  2. supply still low relative to demand
  3. poor commitment by local, state and Federal governments to housing growth and affordability
  4. intense demand for rentals
  5. employment picture better in some cities
  6. low vacancy rates (few are moving, low churn)
  7. migration out of big cities and out of pandemic destinations
  8. high employment (only in some cities)
  9. reduced new apartment or house construction
  10. local building regulations reduce new rental unit development
  11. NIMBY action at local level prevents development of multifamily buildings
  12. high construction costs for multifamily developments and apartment buildings
  13. investor expectations of high returns
  14. younger renter demographics (Millennials who can’t afford to buy will rent instead, and fast rising numbers of Gen Z’s)

Additionally, the residential housing market has moved to single family home ownership rather than multifamily rental construction according to the latest report from multifamily executive.

Apartment construction was brisk back in 2017. However, since then construction rates have plummeted despite low financing rates, improving economy and rising demand.  Although the Realpage graphic below doesn’t show the last 3 quarters, we can forecast the new builds being markedly lower. As the economy passes the pandemic period, we can shortages causing upward pressure on apartment rental prices in 2021.

Housing Supply Declining

NMHC, in its recent report predicts demographic growth is expected to generate demand for another 3.7 million new
rental properties with 5 or more units through 2035. Construction was strong this year with builder confidence up, the FED rate is expected to stay high in 2024 due to persistent inflation, and FED tightening will reduce credit for small builders.

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Which Cities will Have the Youngest Population of Renters?

As this chart shows, cities with the youngest renters have the most potential renters. However, average household income and apartment property prices will determine whether they’re a good bet for the next  5 to ten years for investors. Texas, Utah, and California are the most youthful states.

RankCityMedian Age
Household Income
1Jacksonville, NC23$41,300
2Provo, UT23$40,360
3New Brunswick, NJ24$38,400
4Florence-Graham, CA25$35,500
5College Station, TX25$33,400
6West Jordan, UT25$69,400
7Orem, UT25$54,000
8Laredo, TX25$39,400
9Lynwood, CA26$35,900
10Madera, CA26$42,000
11Edinburg, TX26$42,500
12Killeen, TX26$48,300
13Brownsville, TX26$32,300
14Pharr, TX26$34,700
15Bloomington, IN26$50,000
16Compton, CA27$43,200
17Huntington Park, CA27$36,400
18Paramount, CA27$44,900
19Layton, UT27$66,700
20Fontana, CA27$65,000
22Santa Ana, CA27$53,300
23Cicero, IL27$51,900
24Rialto, CA27$50,300
25West Valley City, UT27$52,800
Dallas, TX32$63,800
San Francisco, CA39$78,400
Boston, MA39$58,300
Source: US Census Bureau

Why Will Apartment Rents Fall?

The downtrend in rent prices is highly visible and is expected to continue. Recession signals are growing, yet the disaster predictions don’t look like they’ll come true. And that could mean rent prices won’t drop much further. A lot of the demand from displaced homebuyers will dissipate.  Construction completions are up to add supply, yet new permits are receding.

Census.gov stats show privately-owned housing starts in March 2023 were at a seasonally adjusted annual rate of 1,420,000. This is 0.8 percent (+/- 13.0%)* below the revised February 2023 estimate of 1,432,000.

The March new construction completion rate for units in buildings with five units or more was 484,000, while the March start rate for units in buildings with five units or more was 542,000.

Investors should key in on specific neighborhoods and cities to find rental apartment properties worthy of investing in. There’s still room for capital gains in these cities. Improve your profits further with a good apartment management software solution.

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See also: Property Management | Property Management Software Brands  | How Raise Rent Prices | Cities with Highest Property Taxes | How to Raise Rent Prices | How to Ask for Rent Payment | Property Management Tips | Community Association Software | Property Accounting Tips | Apartments for Rent | House RentalSet Rent Price | Texas Housing MarketWhich Apartment Type is Best? | Multifamily Housing | Rental Housing

 

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