Relatively Affordable Rentals Become Increasingly In Demand and Prices Rise
With rental prices across the country continuing to rise, places that offer relative affordability are becoming increasingly in demand. This high demand is causing prices to increase, and Realtor.com Chief Economist Danielle Hale warns that current levels of affordability may not last. Cities such as Indianapolis, Birmingham, Columbus, Kansas City, Cleveland, and Rochester are among the more affordable metros that experienced the fastest year-over-year price increases in January 2023, leaving few metros that are maintaining their current level of affordability.
Rent growth for studio to two-bedroom properties across the nation continues to slow. The median rent was down 2.9% year-over-year in January, the lowest growth rate in 22 months. Two-bedroom units saw a single-digit growth rate for the seventh month in a row, with the median rent for two bedrooms being $1,934 nationally, $47 (2.5%) higher than the same time last year.
Cheaper rents are being seen in some of the least expensive rental markets such as Indianapolis, Birmingham, and Columbus, with median rents of $1,266, $1,178, and $1,235 respectively. However, vacancy rates in many of these areas are near their long-term lows, implying a lower than usual rental supply in these metros. As a result, rent growth for these markets is still on the rise, raising further affordability concerns.
Rent growth is still increasing in some Sun Belt cities like Miami and Tampa, Florida, and Tucson, Arizona, where rents are 35% higher than they were in March 2020. But in other cities, such as San Francisco and Tampa, rent had only inched up from where they were a year ago.
For renters looking for a place to live this year, the market should be more favorable, with more apartments sitting open and landlords having to hold rents steady, or even cut prices, to entice prospective tenants. Asking rents, which measure the rents paid by people moving into a new apartment, rose just 2.4% year over year in January, the smallest annual increase since May 2021. With the average cost of rent continuing to slow nationwide, renters in lower-priced parts of the country can find some relief, but they should not expect these prices to last.
0. “10 Cities Where the Median Rent Is Under $1,300” Yahoo Money, 24 Feb. 2023, https://money.yahoo.com/10-cities-where-median-rent-193809769.html
1. “Realtor.com® January Rental Report: Only One Major Market Remains Below $1,000 Threshold” Yahoo! Voices, 24 Feb. 2023, https://www.yahoo.com/now/realtor-com-january-rental-report-110000395.html
2. “Gallery: Top 10 least expensive American metro areas” American City & County, 24 Feb. 2023, https://www.americancityandcounty.com/2023/02/24/gallery-top-10-least-expensive-american-metro-areas/
3. “Renters: 50 Largest Metro Areas Compared” MyChesCo, 27 Feb. 2023, https://www.mychesco.com/a/news/national/renters-50-largest-metro-areas-compared/
4. “January 2023 Rental Report: Least Expensive Metros See Faster Rent Growth” Realtor.com News, 24 Feb. 2023, https://www.realtor.com/research/january-2023-rent/
5. “Apartment Rents Down 3.5% Amid Huge Wave Of New Construction” Bisnow, 27 Feb. 2023, https://www.bisnow.com/national/news/multifamily/apartment-rents-slowdown-as-new-units-hit-the-pipeline-slated-for-delivery-in-2023-117847
6. “Denver-area rent increases are slowing down” FOX 31 Denver, 28 Feb. 2023, https://kdvr.com/news/data/denver-area-rent-increases-are-slowing-down/
7. “Rents will fall as wave of new apartment construction hits housing market” Business Insider, 27 Feb. 2023, https://www.businessinsider.com/rent-decline-fall-apartment-housing-market-landlords-tenant-lease-construction-2023-3
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