Rental Trends You Need to Know: Affordability, Rental Growth, Occupancy, and More
By Nat Kunes, Appfolio
Do you know which cities have the most expensive rent? Or where you can get the most square footage for your money? We’ve summed up some of the major rental trends affecting U.S. cities, so you can prepare your business for what’s ahead and stay competitive.*
Top Five Cities with the Most Expensive Rent:
It’s no surprise that California’s Bay Area and New York City are topping this list; it’s a battle between the West and East Coasts. With the tech boom on top of San Francisco’s strict zoning laws, the rental demand outweighs the supply, so rent continues to rise. With the high cost of construction, zoning preventions, and population rise in New York City, they are experiencing a similar trend. If you’re managing properties in these cities, you’re enjoying the highest rents in the nation.
- San Francisco-Oakland, CA ($2,662/month)
- New York, NY ($2,597/month)
- Boston, MA ($2,284/month)
- Los Angeles, CA ($2,121/month)
- San Diego, CA ($1,872/month)
Five Cities with the Least Expensive Rent:
For renters looking to pay less, they have options across the country. Although rent is coming in quite affordable in Ohio, it should be noted that wages in these cities are also low in comparison to other cities. For property managers in these cities, you may start seeing an influx of renters coming your way as the big cities listed above get too expensive.
- Las Vegas, NV ($995/month)
- Detroit, MI ($969/month)
- San Antonio, TX ($962/month)
- Columbus, OH ($937/month)
- Cleveland, OH ($845/month)
Cities Experiencing the Most Rent Growth:
When it comes to rent growth, you may be surprised by the cities on the list. Arizona and Florida, for example, are seeing an influx of retiring Baby Boomers move into neighborhoods and districts that are built around the theme of having peaceful lifestyles with stable rent and plenty of public amenities. Both retirees and working families have been moving to these states over the last several years, and it seems the market is now taking notice and responding with increased rent.
- Orlando, FL (7.7%)
- Las Vegas, NV (6.7%)
- Phoenix, AZ (6.7%)
- Tampa, FL (6.3%)
- Jacksonville, FL (6.2%)
Cities Experiencing the Least Rent Growth:
Not only did Cleveland come in the top five for cities with the lowest rent, but it’s also on the list for least rent growth. For renters looking to find affordable rent that isn’t about to spike any time soon, they may want to start looking toward Ohio. Texas also has options where the rent is steady, which is a great way for property managers to attract new renters in places like San Antonio and Austin.
- Cleveland, OH (2.9%)
- Portland, OR (2.9%)
- Washington DC (2.8%)
- San Antonio, TX (2.4%)
- Austin, TX (0.9%)
Top Five Cities with Concessions:
The Southwest is where the largest concessions are taking place to attract and retain renters, especially in Texas. Landlords are providing various offers of free rent for fixed periods of time as a way to get more renters to their vacant properties.
- San Antonio, TX (33%)
- Houston, TX (27%)
- Las Vegas, NV (26%)
- Austin, TX (25%)
- Phoenix, AZ (23%)
Bottom Five Cities with Concessions:
In these cities that are experiencing rent growth, it’s no wonder that landlords don’t need to make special offers to attract renters considering what the market and city is doing it for them. When demand is up, the market is in favor of the landlords and property managers.
- Boise, ID (6%)
- San Diego, CA (6%)
- Minneapolis, MN (5%)
- Orlando, FL (5%)
- Sacramento, CA (4%)
Cities with the Most Expensive Rent Per Sq. Foot:
In the big cities on the West and East Coasts, renters are going to get a lot less for their money. Topping the list are San Francisco, New York, and Boston which are all established cities with very fixed space that have to make due with what currently exists. Without much room to grow, rent for the housing that is available continues to increase.
- San Francisco-Oakland, CA ($3.19/sq. ft)
- New York, NY ($2.98/sq. ft)
- Boston, MA ($2.50/sq. ft)
- Los Angeles, CA ($2.44/sq. ft)
- San Diego, CA ($2.17/sq. ft)
Cities with the Least Expensive Rent Per Sq. Foot:
What do these cities have in common? They are all in areas that have enough space to build housing to meet the specifications of what current renters are demanding: more space. With new construction on the horizon for these cities, larger, more modern apartments are on the way to meet with what today’s renters are looking for.
- Raleigh-Durham, NC ($1.09/sq. ft.)
- Jacksonville, FL ($1.06/sq. ft.)
- Detroit, MI ($1.05/sq. ft.)
- Columbus, OH ($1.00/sq. ft.)
- Cleveland, OH ($0.98/sq. ft.)
Occupancy Related Groupings
An interesting trend affecting the rental market is increased occupancy paired with increased rent. The cities experiencing this the most are not specific to any one state. Perhaps as renter demand for these cities increases, the market is responding with increased rent. For property managers in these cities, use your amenities and customer service to outshine the competition!
- Salt Lake City, UT
- Houston, TX
- Atlanta, GA
- Seattle, WA
- Boston, MA
- Los Angeles, CA
- Nashville, TN
- Miami, FL
- San Francisco, CA
On the flip-side, decreasing occupancy with an increase in rent is also occurring across the nation. As renters are leaving these popular destinations, the rent hasn’t quite adjusted to match the lower occupancy. For renters in these cities or looking to move there, keep an eye out for the market to shift in your favor.
- Cleveland, OH
- Chicago, IL
- Detroit, MI
- Raleigh-Durham, NC
- Austin, TX
- Jacksonville, FL
Now is a great time to take a look at the rental trends affecting your region and evaluate what you may need to do to keep up. If the market is slowing for you, perhaps you need to get creative to attract renters to your properties while focusing on your service to retain your current customers. If you’re in a region experiencing growing occupancy, make sure you are taking measures to stay ahead of the competition and win over new renters!
*Data provided by ALN, May 2018. The data looked at the top primary and secondary market cities (30 + cities) across the country, so rankings are inclusive of only the markets considered in the data.
AppFolio, Inc. develops Property Management Software that helps businesses improve their workflow so they save time and make more money. Appfolio submits articles & blogs including topics of Resident Retention, Improved Owner Communication, Time Management, and more.