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The US Rental Property Market Outlook

October 13, 2020

Rental Property Market 2021

Will the 2021 rental property sector still be a good choice for investors and property rental business entrepreneurs?

One survey of property managers, landlords and investors found that almost 2/3rds are optimistic about the rental property sector going into 2021.

The Covid 19 shutdowns and stoppages combined with renter defaults, rising vacancy rates, stimulus withdrawal, and renter out-migration have brought big changes to the property management sector. Inner-city properties are failing but 2021 is a new year.

Outside of high-density areas, higher rent prices combined with a growing renter base (lack of home affordability) and new tech management efficiencies mean the rental housing sector might be at the right point for investors.

Rather the pouring money into the stock market, investors might be encouraged to find a way to invest in rental housing.

Going Digital for Better ROI

The pressure to increase efficiency and deliver digital services is forcing the adoption of technology and cloud-based property management software.  Landlords are seeing this and property management companies are seeing the business advantages of technology too.

The major point is that rental property investment or management benefits from subdued new construction, housing shortages, and a reviving economy.  That would lead us to believe this may be a low point for investors and entrepreneurs to enter the property rental market.

And high-density units are suffering low occupancy and low prices now, so the return of the US economy next summer should help the best types of these properties become good long term performers.

Apartmentlist Top Rent Cities

This list of best rent price growth performers from Apartmentlist shows (from March to now) how strong these markets are. Home price values mean improving equity plus tax advantages provides a significant profit opportunity.

Screenshot courtesy of

Opportunity Shifts Outside Major Metros

Although inner-city apartment and condo rent prices may be falling, in the US, Australia and the UK capital cities, the migration to suburbs and outlying towns is forcing rent prices up in those areas. With lower property prices in those regions and new rising demand from homebuyers and renters, the rent revenue outlook is good.

Charlotte, San Antonio, Milwaukee, and Denver draw interested migrants. Chart courtesy of

If we project beyond summer of 2021, post Corona Virus, if the economy holds out, property rental prices should increase, and inner city apartment occupancy rate may rise again. This might be the basis of property manager’s positive outlook.

Demand for Roominess and Single Family Detached Homes

The demand for single-family house rentals has grown more intense. And in some cities (in charts below) rent prices are rocketing upward. Opportunities for property investors and property managers have therefore changed.

On a national basis, the rental migration shift to the suburbs and small towns isn’t such a bad thing.  It’s resulted in new construction and new jobs in regions in the UK and US that have struggled for decades. And it’s created new opportunities for profitable rental housing investment.  New opportunities offer business possibilities for new property management startup companies.

Two Different Rental Markets

Clearly, there are two rental markets now: inner city and all the rest.  Even multifamily property owners are seeing divergent results depending on the size and class of their buildings and income of their tenants. Older small buildings in inner cities (New York, San Francisco, Los Angeles etc.) may be worst as they’re fully vulnerable to the cancel rent movement, high vacancy rates, and ongoing eviction moratoriums of low-income tenants.

Uncertainty Clouds All Forecasts

Political responses are what make a coherent and comprehensive analysis so difficult. Although the economy suffers and unemployment is high, rents are only falling in major metro inner cities like San Francisco Bay Area, Los Angeles, Manhattan, across Silicon Valley and other areas of California.

We covered a number of the drivers and changes in the housing market report, events that have changed real estate investors’ outlook. Covid 19 shutdowns are the big story across the globe in Australia, Germany and in the UK property market too.

2020 Harvard Report on Rental Market

The latest revised report from Harvard University, entitled America’s Rental Housing 2020 touches on ultra-low vacancy rates, cost-burdened renters, higher-income households, constraints on housing supply, and losses of low-cost rental apartments. That report tends to tell us much of what we already know and doesn’t cover the Covid 19 period. The post-pandemic period will begin to gravitate back to last winter’s status, which the Harvard study covers.

More on the Harvard research below.

Apartment and House Rent Prices Forecast for 2021?

Tenants are wondering if rent prices will fall in 2021? And landlords are wondering about rent and eviction moratoriums, and how they’ll survive without adequate revenue and cash flow.

For most cities, house rental prices may continue to rise as they have this year.

And property investors are wondering if rental income and 2021 tax rules will keep the rental housing sector an acceptable market for business. Avoiding big losses might be the top issue for investors.

The data suggests that it depends on where you are. Some cities such as San Francisco,  New York City and Manhattan look very troubled.

The upcoming Presidential election has to be the top factor in all housing markets. A tax-induced recession could crush the housing industry, but rentals might not be as affected. With housing shortages, reduced and fewer people buying, demand for rentals would only grow. See which cities are best to invest in rental properties.

Rental Market Vacancy Rate

This graphic from St Louis Fed highlights the competitiveness of the rental market as available units continue shrinking, despite new construction. Of course, vacancy rates in the major metros are beginning to climb much higher as 2020 progresses.

Brick Underground, citing a Douglas Elliman report, says the number of rental listings on the New York City market (Manhattan, Brooklyn, and Queens) hit the highest total in 14 years, rising 166%. And leases with concessions, like a month or two of free rent, reached its highest in 10 years and newly signed leases fell 23.7%.

Rental Forecast for Europe

To compare trends, UK, Spain, France and Italy were expecting a slower return in 2021 and may have smaller markets than pre-Covid.

ERA and its consultant IHS Markit, show that the hardest hit countries this year will be Italy and the UK – both suffering -16.3% drops – followed by France, down -14.4%, and Spain at -14.1%. The UK is forecast to make a +4.6% recovery in 2021, while Italy will rebound by +7.1%.   Similarly, Spain is predicted to grow by +5.2% and France by +8.4% in 2021. That means these countries will have markets in 2021 still significantly smaller than in 2019. — from KHL report.

As the fall season sets in, we’re not seeing the economy jump back as expected and unemployment remains high. If Covid 19 runs rampant again this winter requiring shutdowns in some cities, it will again impact all landlords.

Retail and office vacancies will continue to pressure the commercial property sector. Office vacancies are forecast to be very high and retail landlords will be seeking bankruptcy protection as tenants seek to defer rent payments or go out of business themselves.

Retail-focused REITs have been hit hard and now are being further downgraded for 2021. Even the best of them are expecting significant cash flow volatility.

Moody’s reports that the office sector will be hit hard with vacancies and falling rents in New York and other large markets hitting 21%.  At home telecommuting will become the norm.

Multifamily Low Rent Properties Suffering Worst

While class C properties with downscale apartment rental tenants has been a troubled sector for landlords in 2020. The single family housing sector outside of dense inner cities has done well in 2020 and is the focus for investors in 2021.

The 2021 outlook is stronger for single family because of new construction, migration to cheaper outlying cities, and due to demographic changes (millennials creating families, babyboomers finally selling their homes).

Why is rental property still a hot investment sector? Primarily, it’s all driven by an improving economy into 2021 and a strong lack of rentable housing. The paucity of apartments and houses for rent is driving rent prices higher.

Are Rent Prices Going to Drop?

The US housing market including the house and apartment rental market were running strong with rent prices rising through the pandemic. Rent prices in the most expensive cities such as New York and San Francisco are dropping.

According to Zumper, 9 out of the highest-priced markets are seeing rents drop faster. It’s impossible to find a moving van in the metros of NYC, San Francisco and Los Angeles. Only San Diego bucked the trend, likely due to its beautiful lifestyle and severe shortages of rentals.

Currently, Covid 19 fear and work at home mandates are heavily covering the housing market and rental markets. If more housing was available, we’d see more lease terminations and sold homes in the cities.

National Rent Prices

Some of the most unlikely US cities are seeing rent increases including Detroit, Chattanooga, Cincinnati, Norfolk, Laredo, or Lincoln. Washington, San Francisco, New York City, Akron, and Minneapolis saw the sharpest drops in rents.

The most expensive cities in the country may not be within a few months.

Cities with the Largest Price Drops

Zumper offers an extensive report on the price trends for most US cities. Here they list the cities with the greatest price drops. You can read more at:

1 Bedroom2 Bedrooms
Rank USCityPriceM/M %Y/Y %PriceM/M %Y/Y %
92Detroit, MI$7405.70%15.60%$8303.80%15.30%
63Chattanooga, TN$9505.60%15.90%$1,0703.90%15.10%
63Cincinnati, OH$9505.60%15.90%$1,150-4.20%-2.50%
60Norfolk, VA$9705.40%15.50%$1,1000.00%7.80%
87Laredo, TX$7905.30%-9.20%$850-3.40%-7.60%
85Lincoln, NE$8105.20%15.70%$9703.20%4.30%
53Milwaukee, WI$1,0405.10%2.00%$1,1905.30%11.20%
18Providence, RI$1,4705.00%-7.00%$1,7604.80%6.00%
48Irving, TX$1,0804.90%-4.40%$1,4200.70%-5.30%
74Columbus, OH$8504.90%14.90%$1,1004.80%-2.70%
43Reno, NV$1,1004.80%14.60%$1,4204.40%2.90%
96Tulsa, OK$6504.80%-1.50%$8301.20%2.50%
26Newark, NJ$1,3504.70%11.60%$1,7902.90%15.50%
27St Petersburg, FL$1,3304.70%15.70%$1,6400.60%5.10%
41Madison, WI$1,1104.70%-7.50%$1,3804.50%1.50%
63St Louis, MO$9504.40%14.50%$1,220-4.70%1.70%
58Cleveland, OH$9804.30%15.30%$1,0505.00%15.40%
83Augusta, GA$8203.80%5.10%$9002.30%8.40%
19New Orleans, LA$1,4503.60%6.60%$1,7304.80%7.50%
8San Diego, CA$1,8002.90%2.90%$2,3502.20%-4.10%
48Virginia Beach, VA$1,0802.90%-0.90%$1,250-0.80%3.30%
48Buffalo, NY$1,0802.90%3.80%$1,280-5.20%3.20%
94Tucson, AZ$7202.90%10.80%$9303.30%5.70%
88Greensboro, NC$7602.70%4.10%$8904.70%4.70%
74Memphis, TN$8502.40%10.40%$9002.30%9.80%

Above data courtesy of Zumper


The reviving economy will be welcome news to landlords and property management companies who have seen their cash flow interrupted, increasing administration time, possible legal bills and evictions, and threats of rent controls.

“I’m seeing rents are down 10% to 20%, with higher-end and luxury units taking the biggest hits,” said Dave Chesnosky, an agent with Compass in San Francisco. “But these drops are dependent on the location and uniqueness of a unit.” — from CNN Report

The Biggest Threat – Fed Aid Termination

If the government can’t agree on aid packages or aid must be tapered off, it will not bode well for multifamily investment. Without the economy, mass transit, and employment income, multifamily apartment rent defaults may become the norm in 2021. And many landlords may find themselves unable to capture rent due through the pandemic with substantial back rent owed by tenants which they will likely never pay.

All levels of US government are transferring the financial load and losses to property owners themselves. It’s an unprecedented dumping of loss onto the private sector, particularly residential apartment landlords.

Property Management Software California property managers love: ManageCasa


The Federal Aid programs helped to bridge the shutdown, but the deficit for renters is just too much. In California and New York where rent prices are the highest, these aid programs barely help at all. As in the story above, those with $2000 to $4000 a month rent payments are experiencing the most difficulty.

Harvard University Findings

Harvard produces a report each year on the rental market entitled: America’s Rental Housing.  In it is a wide variety of stats that reflect the condition of properties and renters across the US.  (See the German, UK and Australian reports). It isn’t up the Covid 19 era however.

For property investors, net operating incomes were growing strongly in the 3rd quarter of 2019 and investors were really stepping up investments. According to CoStar, the dollar volume of multifamily transactions rose 9% year over year, to $94 billion, through the first three quarters of 2019.

Higher prices support new construction yet construction costs are rising very fast, and with the possibility of the Democrats regaining the Whitehouse, their regulations may be reinstituted.

  • new construction units are focused on higher-priced units
  • air conditioning and in-suite laundry have grown strongly
  • construction costs are rising
  • apartment prices have doubled since 2010
  • low rent apartments are increasingly unavailable
  • actual renter market has been shrinking
  • middle-income renters are increasingly cost-burdened

Renters are wealthier as more of them are earning above $75,000 per year, but they are renting vs buying a home. Those at the bottom of the renter pool are earning less and renting less. The Harvard report doesn’t specify what has happened to the lower-income group, but notes that homelessness is rising.

Chart courtesy of


Chart courtesy of

Chart courtesy of

The point to be made is that most new construction has been 50+ units buildings built in the large metro cores where people are now eager to leave. The vacancy rate in some high rise condo buildings is surprisingly high (Covid 19 fear).  The new construction property owners will likely be stuck with suffering revenue for at least a year or more as the pandemic rages on.

Work at Home

As workers get used to working at home, they will not be coming back to the cities in great numbers to their previous lives. Since vaccines are not guaranteed to work, it means many people, particularly older people will fear becoming infected in high density buildings. The virus threat may continue on forever as it does with the major flus.

Future demand for inner-city apartments and for high rise apartment buildings won’t return to previous occupancy rates.

Rents Did Fall Due to the Corona Virus

We asked previously, as our visitors were keenly interested in how rents would go.  In fact, rent prices did drop for the first time in the wake of the Corona Virus.

“I’m seeing rents are down 10% to 20%, with higher-end and luxury units taking the biggest hits,” said Dave Chesnosky, an agent with Compass in San Francisco. “But these drops are dependent on the location and uniqueness of a unit.” — from CNN Report.

The CARES Act is helping tenants pay their rents for now, if they decide to pay the rent.  Those property management firms and landlords who use modern property management solutions are able to improve their financial management, while automating tasks and maintain more productive relations with tenants.

Property Management Software Tenants love.

The Federal Aid programs helped to bridge the shutdown, but the deficit for renters is just too much. In California and New York where rent prices are the highest, these aid programs barely help at all. As in the story above, those with $2000 to $4000 a month rent payments are experiencing the most difficulty.

Landlords, see why ManageCasa might be your best solution to encourage rent payment from tenants. Tenants should advise their landlords to investigate the advantage of automated partial payments.  It’s good for both.


US Rental Housing Market

We’d like to review/critique the data from top sources including Zumper, to help buyers of investment rental property,  landlords and property management companies better understand and manage their rental properties.

In some cities, demand is brisk, seen in the charts below, and rent prices have jumped. With interest rates so low, and now lower, the investment environment for rental property is promising. The key factor in today’s rental housing markets and real estate markets, is a significant lack of housing.

With strong employment and rising wages, the risk for rental property owners is lower than normal. The key to the rental market is high demand and low supply leading to innovation such as build to rent homes. Migration and economic shifts mean there are new cities to buy investment property.

Pre Covid 19: 6 Big Rental Market Changers

However, the industry is experiencing changes due to: automation technology, investment choices, demographics, persistent housing supply issues, corporation investment funds, and new regulations.

Stats show that trends of recent are different from the 2000 to 2008 period as well as the 2010 to 2018 period. These trends affect investors choice of properties, new construction decisions, housing construction and availability, rent prices, and even determine whether rent controls and other harmful legislation is enacted.

Using this data, landlords and property managers can better identify their customers, where the market is now and where it’s going, what types of rental units to buy, and whether rental property will continue to be a good investment.


Enjoy our epic report on the US rental housing market. Please do share!


This Rental Housing report is divided into sections:

  1. What is the current State of the US Rental Market?
  2. What’s Really Causing the High Rents?
  3. Who owns rental properties today?
  4. What are the challenges for rental property owners?
  5. Which types of rental Properties should you buy?
  6. Are renters getting squeezed too hard?
  7. What are the rent prices across the US?
  8. Which cities have the highest rents and ROI?
  9. Housing construction forecast
  10. Forecast of Renter Population Growth
  11. 15 Drivers of the Rental Property Market

 1. What is the Current State of the Rental Market?

The face of the American Rental markets has changed and continues to through 2020. If you’re still targeting, marketing to, and managing renters against old profiles, you might enjoy this new view of the US rental market.

The US renter market is not balanced. Estimates are that millions of apartments are needed up to 2030.  Construction has fallen short. Occupancy rates are very high. Homelessness is common. The fact is, a commitment to housing supply continues to be missing.

The market is pressured by high rising rental rates, lack of affordable rental housing, disappearance of low income renters, and a migration of jobs and workers to other cities where new construction is growing. However, financing and interest rates are accessible, cutting the risk to investment.

Renting in the US is big money. According to Zillow, U.S. renters paid roughly $4.5 trillion in rent during the last decade, more than the 2018 GDP of Germany. They reported that in 2019 alone, U.S. renters paid $512 billion in rent. Renters in New York ($56.6 billion), Los Angeles ($39.2 billion) and San Francisco ($16.4 billion) paid the most in 2019.

Total Rent Paid by US Renters. Screenshot courtesy of Yardi

“the homeownership peak in 2004 to 2018, the number of married couples with children that owned homes fell by 2.7 million, while the number renting rose by 680,000.” — from the AMERICA’S RENTAL HOUSING 2020 report by the Joint Center for Housing Studies of Harvard University.

 2. What’s Really Causing the High Rents?

Today’s rental market has an unfulfilled demand from renters at lower rent prices. That segment is evaporating.
Affordable housing shortfalls have led to rising rent prices just as many renters are becoming employed again or are earning higher wages. It’s one part scarcity and one part demand from renters with more money, who can’t afford to buy a home or condo.

For landlords, this points to rent defaults and evictions. This is causing a boom in credit checking, tenant screening, and automated payment solutions, which would help landlords avoid cash flow problems and legal problems stemming from evictions.

 3. Who Owns Rental Property?

Recently, according to a report from Harvard, discussed below, institutional investors have discovered value in the rental market too. They’ve been buying multifamily properties, houses and apartments, in huge numbers. And they are ready to manage them at scale. New technology, including property management software is making large scale management possible thus making rental property a profitable investment.

That report said the share of mid-sized apartment properties owned by individuals has dropped from nearly two-thirds in 2001 to about two-fifths in 2015. Older apartment buildings in particular with low rents, are attractive to institutional investors who like the profit potential of these after an upgrade. And they may be the only buyers with the cash to rehab the buildings which are often run down and costly to operate.

 4. What are the Challenges for Rental Property Owners?

High rents and low costs are not a given. Markets change, and your renters may not be able to keep up with higher rents and young renters expect different services.

For landlords who resist change and technology, pressures and responsibilities are mounting.

Landlords’ biggest challenges is in daily property management including maintenance, bookkeeping, tenant management, and meeting their budget. Keeping up with advancements in technology is another challenge that pressures many. In fact, a trend to migrate from old software solutions to more modern platforms is underway.

Landlords must learn new ways of doing business.

Landlords are faced with these top challenges:

  1. earning a profit
  2. finding a good property management company
  3. finding a good online property management software
  4. meeting tenants demands for instant service, self-service, extra amenities, and online payments
  5. managing the expense and risk of modernizing old rental properties
  6. finding affordable prices
  7. managing irate tenants who can’t afford their rising rents
  8. late rent payments, rent defaults, and rising rate of evictions
  9. selling then buying better properties with sustainable ROI
  10. working long hours, handling too many tasks and getting them all completed
  11. meeting government regulations

 5. Rental Property Types

There’s no shortage of rental property types. From student housing and seniors housing, to fix and rent single family, to beachfront vacation rentals, and from studio apartments to luxury condos.

Rent Growth by Asset Type Year over Year. Screenshot courtesy of Yardi

According to Rentcafe, the most searched for apartments were 2 bedrooms (45%), 1 bedrooms (27%), 3 bedrooms (16%), and Studios (12%). Now in September, the rising demand for larger rental units is profound.

Bedroom TypeAverage RentChange M-o-MChange Y-o-Y
1 Bed$1,2250.10%3.40%
2 Beds$1,4080.10%3.50%
3 Beds$1,6440.20%3.20%

National Data Courtesy of

 Latest US Rent Prices Courtesy of Zumper

The high year over year rent growth for 2 bedroom units occurred in New York, Newark, Washington DC, Milwaukee (14.7%),

National Average Rents for Cities. Screenshot courtesy of Zumper

 6. How Much Are Rent Prices Today?

Around 2018/2019, rent prices were plateauing, But within the last year, rents have begun to rise faster.

Renting a condo or apartment or house has increased in every age group. The Rental market was plateauing up to 2018, but 2019 has seen a revival with 350,000 new renters.

And last, but not least is this recent report from Apartmentlist showing cities with very strong rent price increases. Keep in mind, that rent price growth is just one factor in assessing investment potential.

Cities with Fastest Rent Growth the past year. Screenshot courtesy of Apartmentlist.

High income renters have increased by 545,000 through 2018. Those earning over $75,000 accounted for 75% of new renters (3.2 million) from 2010 to 2018. 157% more Americans earning more than $150K per year began renting this past decade (Rentcafe).  In contrast, renters earning less than $30,000 fell by nearly 1 million. This is the exact opposite of what happened in the 2000’s decade.

According to Harvard, the number of low-cost units renting for under $600 fell by 3.1 million and the supply of new units from $600 to $1000 fell by 450,000 units.

With respect to rental unit construction, new building has been brisk, however much of it is being built for higher-income earners.

It would seem that due to the rising income of some has resulted in that group commanding the market, leaving little for other groups. High construction costs, high land costs, high materials and labor costs, also tell us that housing cannot be built for low-income populations, at least profitably. Therefore, governments may be the only group capable of provisioning low-income housing.

Reports show that vacancy rates are below 5% in most metros, and 45 of them were below 3% vacancy rates. They found only Houston, Oklahoma City and San Antonio had vacancy rates above 5%.

These are historic lows. While low vacancies and high rent are a welcome situation for landlords and property management companies, for tax charging metros, it means higher costs to manage the homeless and the fallout related to a lack of housing.

This chart below show how occupancy rates are climbing and vacancy rates falling across all types of rentals. Harvard stated that rent prices of primary residence rose by 3.7% year over year in the third quarter of 2019, which far exceeds the 1.1 cost of living.

The record for consecutive quarterly growth in rents to 29 or more than 100 months straight!  The data shows real rents rose 4 times faster in the 3rd quarter of 2019 than the prices of all other goods sold in the US.

 7. Are Renters are Getting Squeezed Too Hard?

One controversial, IMHO, is that rental housing is not being created or marketed to low-income earners. The lower-income segment simply isn’t being served. It might be said however, that governments could free up land, provide tax relief, and assist developers in building appropriate low-income housing solutions.

Such an effort may be well beyond the means of the private sector rental housing investment community in terms of cost and risk. Governments can if they choose, make it profitable for such housing to be built.

According to the Harvard report, 10.9 million renters spent more than half of their incomes on housing in 2018. In that year, the number of severely burdened households increased 155,000, reducing the total improvement since the 2014 peak to just 483,000. Cost burdened renters rose again in 2018, rising by 261,000 to 20.8 million.

They found that 72% of renters earning less than $15,000 annually were severely burdened, along with 43% who earned $15,000–29,999.

The rise in homelessness in Los Angeles, New York, San Francisco, and other cities shows the problem is real.

 8. Should I Buy Rental Property as an Investment?

Rents keep rising in 92% of cities, and will 2021 see the same positive circumstance for rental property investment.

From Florida to California to Hawaii, the rental market remains constrained. Although prices have flattened or fallen in many areas, the revenue potential for builders and property owners is positive.

The US rental property market is a growing chunk of the now estimated $127 Trillion global real estate market which accounts for 60% of all mainstream assets.

The rental property market is less than half of the $36+ Trillion US Real estate market, yet for small property investors, it’s a fertile paradise.

 9. Average Rents Inch Upward

2020: The average rent price change reported for the US is skewed due to renters leaving the major US cities of San Francisco; New York; Boston; San Jose; Oakland; Los Angeles; and Washington D.C.  The same trends exist for London UK and Sydney Australia, so it’s an international trend.  Outside of the major or capital cities, rent prices are rising.

It would appear there is so much latent demand in the US economy, that prices will be difficult to suppress. The question regarding the housing market is if there are sufficient homes available to be listed this fall. Without home listings, people will have to continue renting.

Manhattan, San Francisco and Washington DC come in with big rent prices while Chicago’s rents are moderate.

From Florida to California to Hawaii, the rental market remains constrained.  Although prices have flattened or fallen in many areas, the revenue potential for builders and property owners is positive.

The US rental property market is a growing chunk of the now estimated $127 Trillion global real estate market which accounts for 60% of all mainstream assets.  The rental property market is less than half of the $36+ Trillion US Real estate market, yet for small property investors it’s a fertile paradise.


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Check out our reports on specific markets such as Hawaii, Phoenix, Chicago, DenverLas VegasCaliforniaAustin, Oakland, San JoseSan Francisco, and more.

And see the 2021 UK housing report and the Australian housing report.

And the solution professional property managers need is great software. It’s pushing more investment into proptech and cloud property management solutions.

Please Do Share this market update and forecast with your friends on Facebook

 10. USA Cities with the Highest Rents 2020

Rents are falling fast in San Francisco; New York; Boston; San Jose; Oakland; Los Angeles; and Washington D.C, however rent prices are rising in thousands of smaller cities and towns where people are migrating to.  Accorsing to Zumper, in October, Chesapeake Virginia (+5.4), Rochester NY (+5.4%), Newark NJ (+5.1%), Norfolk Virginia +5.3%), and Cleveland Ohio (+5.1%) have seen the fastest growing rent prices.

Rents are rising, and in some cities, very high and still rising. Good opportunity or a risky bet?

Screenshot courtesy of Zumper.

 11. US Housing Construction Forecast

The housing construction market is brisk and expected to continue rising. Single-family detached and low rise condominiums are the most desired properties. The housing market needs 1.4 million new homes each year and this could increase in 2021 due to immigration.

Housing construction starts. Screenshot courtesy of


A recent report from RentCafe suggests that multi-unit construction is up 60,000 more units in January.

Chart below shows the falling rental vacancy rate nationwide.

Screenshot courtesy of

 12. Renter Population Growth Forecast

Immigrants are a big component of rental demand and the US rental market is expected to focus more on immigrant buyers in the next 12 years.

Chart Courtesy of

 13.  Top Drivers of the Rental Property Market

These 15 factors may influence the rental housing market, priced drops, and which cities will be best to invest in.

  1. buyer market is young and unable to finance the purchase of a home
  2. not enough single detached homes available to buy
  3. risks in buying are high with high prices, rising mortgage rates and housing market uncertainty
  4. millennials are career-minded and not necessarily willing to buy now
  5. bank of mom and dad may be running out of money
  6. home and condo prices too high to purchase
  7. buyers won’t buy due to mortgage finance restrictions and long term worries over a recession/market crash
  8. cost of living rising
  9. millennial preference for older urban neighborhoods with walkability
  10. rents rising too fast compared to cost of buying a home
  11. cap rates not sufficiently better than other investment options
  12. immigration into the US is still strong
  13. retiring baby boomers having tough time places to move to
  14. more good condos and apartments available because regulations are decreasing and construction techniques are better
  15. The number and share of cost-burdened renters – those paying more than 30 percent of their income rose

If rental properties are even a quarter of the $36 Trillion US real estate market, we can say with confidence that it has major economic impact. The growth in rental apartment, rental condos, and home rentals is creating a lot of jobs including property managers, landlords, and the kind of passive income many investors need.

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The US property rental market is a wonderful opportunity to earn passive income or ramp up earnings with active property management. Make sure you are utilizing the best property management software to ease your workload and create efficiencies and create sustainable cash flow.

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