America’s Hottest Rental Markets at the Start of 2023: North Jersey Overtakes Miami as Competition Builds Up in the Northeast

• The national competitivity score is 60 out of 126 at the start of the year, with vacant apartments occupied within 38 days, on average.
• North Jersey is the most competitive rental market in the U.S., outpacing the Sunbelt.
• Eight of the nation’s 20 most competitive markets for renting are in the Northeast.
• Apartments are harder and harder to find in small, low-profile markets across the U.S.

A combination of factors including rapid inflation, interest rate hikes, high home prices, and increased costs of living are pushing many renters to reconsider their housing options. So, as the new year unfolded, many were seeking better living situations within their budgets.

Of course, the warm, business-friendly Sunbelt states have long been highly coveted renting spots, particularly during the pandemic. However, the start of 2023 saw a pivot to markets located in the Northeast. As a result, eight of the country’s top 20 hottest renting spots are in the Northeast.

Aspiring homebuyers continue to rent in North Jersey while enjoying a relatively affordable cost of living for the tri-state area. This allows renters to save for down payments until the housing market cools down enough that they can fulfill their dream of owning a home. Accordingly, North Jersey became the hottest renting spot in the country at the beginning of 2023.

But what were the most in-demand renting spots at the start of 2023? To rank the nation’s most competitive rental markets, RentCafe.com analyzed the 134 largest markets in the U.S. where data was available. For this, we looked at the most revealing metrics when it came to competitivity, including:

• the number of days apartments were vacant
• the percentage of apartments that were occupied by renters
• the number of prospective renters competing for an apartment
• the percentage of renters who renewed their leases
• the share of new apartments completed

Then, to see how competitive the rental market was as the year began to unfold, we calculated a Rental Competitivity Index (RCI). At the beginning of 2023, the national RCI score was 60, which indicates a moderately competitive rental market.

The overall housing supply can’t keep up with demand

As the new year began, vacant U.S. apartments were occupied within 38 days, on average, with 8 prospective renters competing for each available apartment amid an occupancy rate of 94.2%. At the same time, 60.7% of apartment dwellers renewed their leases. Plus, with the number of newly opened apartments accounting for an extremely modest 0.43% of the nation’s housing supply, finding a new place to call home can become challenging this time of the year.

By comparison, one year ago, vacant apartments were filled almost one week faster and there were three more people applying for the same rental. This was especially significant because more renters (64.7%) chose to renew their leases and newly built apartments represented only 0.75% of the total apartments in the U.S. These factors then led to 95.6% of apartments being occupied at this time last year.

Unsurprisingly, renters continue to face intense competition in some of last year’s hottest markets in Florida — including Miami, Southwest Florida and Orlando —where a high number of new apartments were completed, but not enough to meet demand.

As a matter of fact, apartment construction dwindled in almost all markets compared to the start of 2022. Looking at the top 20 hottest rental markets in the U.S., only Milwaukee, WI, and Central New Jersey saw the pace of construction pick up as 2023 was starting to unfold.

Almost half of the country’s red-hot rental markets are in the Northeast

North Jersey is the country’s hottest rental market, with an RCI score of 115. Encompassing more laid back, affordable places like Jersey City and Newark, renters here are just across the bridge from the hustle and bustle of Manhattan, so they get to enjoy the best of both worlds.

Plus, in recent years, North Jersey has turned into a desirable location for well-heeled renters looking for nicer apartments, more elbow room and a better work/life balance while still being close to the Big Apple’s attractions. Namely, between 2015 and 2020, high-income households earning more than $150,000 per year increased by 151% in Newark and by 75% in Jersey City.

For this reason, finding an apartment for rent in this popular part of New Jersey is no easy task these days. Here, the severe shortage of housing (newly opened apartments accounted for only 0.27% at the beginning of the year) and an influx of newcomers — mostly transplants from gateway cities — pushed North Jersey’s occupancy rate to a high 96.6%.

As if the lack of new apartments weren’t enough of a hassle for would-be renters, 72.2% of apartment dwellers in North Jersey also chose to renew their leases, thereby putting even more pressure on the rental market. As a result, at the beginning of the year, it took 34 days for the average vacant apartment in North Jersey to become occupied, with 12 prospective renters competing for the same available unit.

Competition builds up in undersupplied renter hubs on the East Coast, including Brooklyn, NY and Boston

Speaking of the lack of new apartments, Brooklyn, NY, (RCI score 86) is an interesting example. Coming in 14^th in our ranking, this desirable borough of New York City has been consistently welcoming transplants from all around the country, including many renters priced out of Manhattan. These newcomers — along with the existing renters — are willing to compete for the limited number of apartments here just to get to live in the Big Apple, even with its high cost of living.

But, despite the fact that 2022 was a record year for new apartments built throughout New York City, housing in Brooklyn is far from meeting the pent-up demand: The number of newly opened apartments added just 0.3% to what was available on the market — and it wasn't enough to lower the occupancy rate. On top of that, more than two-thirds of Brooklynites renewed their leases. So, the average vacant apartment in Brooklyn attracts about 9 prospective renters and gets filled within 43 days.

Claiming 19^th place (RCI score 76), Boston paints a similar picture when it comes to renting. After more than two and a half years of escaping the city’s crammed apartments and high cost of living, softening pandemic restrictions allowed workers to return to the office and students to go back to in-person classes at Boston’s many colleges and universities. Combined with high home prices and very few newly built apartments, this added even more pressure on The Hub’s housing scene. That said, 95.3% of all apartments for rent in Boston were occupied at the start of 2023, especially as 60.9% of renters chose not to move. Consequently, a vacant unit in Boston is typically occupied within 38 days, with 10 renters competing to secure a lease.

On the other side of the country, Orange County and San Diego are neck and neck for the hottest rental market in California. Their RCI scores of 89 and 87, respectively, reflect occupancy rates of just above 96%. That's because zero apartments were opened recently in these markets and because more than half of apartment dwellers renewed their leases in both markets. So, vacant apartments in Orange County are filled after 39 days, with 11 people applying for each available unit. Similarly, the competition is slightly tighter in San Diego, where 13 prospects fight for each available unit and vacant rentals are occupied faster (after 34 days, on average).

Florida’s well-known hotspots for renting haven’t lost their appeal

Year after year, waves of people flock to Florida — a trend that has only grown stronger since early 2020 when record-high numbers of newcomers headed to the Sunshine State seeking a combination of a laid-back lifestyle and a lower cost of living. That said, it’s no surprise that many Florida locations that were red-hot in our previous rankings remain very competitive at the start of 2023.

To that end — and with an RCI score of 112 — the nation’s second most competitive rental market is Miami, FL. Boasting a record-high occupancy of 97.1% (as well as a high lease renewal rate of 70.9%), the Magic City continues to attract Gen Z and Millennial workers seeking all the benefits Florida has to offer, including the friendly business climate and the absence of income tax.

On average, vacant apartments in Miami are filled within 33 days, with 20 would-be renters competing to secure a lease — the highest number of prospective renters per vacant unit in our overall ranking. That’s despite the 1.24% increase in new apartments at the start of 2023. Simply put, there are still not enough rentals in Miami to accommodate all of the apartment seekers.

Silicon Valley, Manhattan see spectacular shifts in competitivity since one year ago

When analyzing competitivity at the start of 2023, several shifts stood out on a year-over-year comparison. For example, Silicon Valley’s competitivity score grew by a staggering 46 points since the start of 2022 — from a modest 22 to a robust 68 — placing it 27^th in our overall ranking. Notably, the area’s impressive rise in popularity was mostly fueled by high home prices and a lack of new apartments as remote workers slowly return to tech-driven California cities like Palo Alto, Menlo Park, Cupertino, Sunnyvale and Mountain View. To top it all off, significantly fewer apartments opened throughout Silicon Valley compared to one year prior (due to a 2.1% drop in new construction year-over-year). Therefore, an average of 11 prospective renters competed for each vacant apartment, which was occupied within 35 days.

Next, Western Los Angeles County’s RCI score grew from 26 to 55 year-over-year as the area continued to struggle with a housing shortage (despite an 0.8% uptick in the total number of apartments) on top of the high cost of living. Granted, California’s hottest markets in the last couple of years — Orange County and East Los Angeles — remain competitive, although it takes longer for apartments to fill.

Likewise, Manhattan gained 27 competitivity points since the start of 2022, kickstarting 2023 with an RCI score of 67. With almost two-thirds of renters renewing their leases — largely due to the longstanding shortage of apartments combined with rising mortgage rates, as well as the tenant eviction rules initiated in 2019 — Manhattan’s occupancy rate increased by 0.4% year-over-year to a strong 94.8%. This then led to more renters competing for one vacant apartment, although apartments remain vacant for longer periods of time.

Furthermore, Chicago’s RCI score of 45 has more than doubled since the start of 2022, although it's still easier to find apartments here than in cities with RCI scores above 70. With available rentals becoming fewer and farther between in the Windy City, many apartment seekers turned to the suburbs, only to face even fiercer competition as 2023 rang in.

However, Suburban Chicago’s RCI score climbed 20 points to reach 93 at the start of 2023. That’s mostly because a lot of Chicagoans who moved to areas like Naperville, Evanston or Des Plaines during the pandemic chose to stay here. And, with virtually zero new apartments opened, would-be renters found themselves in a tight spot at the start of 2023. As a result, Suburban Chicago is the 10^th hottest rental market in the U.S.

On that same note, two Texas markets also became more desirable compared to early 2022: Dallas gained 11 competitivity points year-over-year to reach an RCI score of 58 (slightly lower than the national average), while Houston’s appeal increased by 10 competitivity points (RCI score 35).

Interestingly enough, Brooklyn saw the highest increase in occupancy compared to one year prior (up 0.7%), which explains the 19-point uptick in competitivity in those 12 months. In fact, the only other markets to register increased occupancy rates year-over-year were Manhattan (up 0.4%), Silicon Valley (up 0.3%) and Chicago (up 0.2%).

Lafayette, IN, is America’s most competitive small-sized rental market

While large cities are attractive again for many apartment seekers, there are still plenty of renters who are perfectly happy embracing small-town life. At the same time, the increase in students seeking off-campus housing near colleges and universities only added more pressure in small-sized markets where rentals were already hard to come by.

Lafayette, IN, is America’s hottest small-sized rental market in our ranking, boasting a whopping RCI score of 126. This friendly Midwestern city is less than 3 miles from Purdue University’s campus in West Lafayette, which set a record for enrollment at 50,884 students last fall, surpassing the previous year’s record. With many Purdue students and staff seeking housing in the area — on top of incoming residents and existing renters — it’s no surprise that low-supply Lafayette began the year with an occupancy of 96.8% and a high lease renewal rate of 73.8%. On average, it takes a month for a vacant apartment in Lafayette to become occupied, with 12 prospective renters competing for the same unit.

Hot on the heels of Lafayette is Fayetteville, AR, (RCI score 125) another college town right in the heart of Walmart country. With an impressive 77.5% of renters staying put and just a handful of apartments recently built, this sought-after renting spot has an occupancy rate of 97.6%. Under these extremely tight market conditions, vacant apartments get filled at lightning speed (15 days, on average), with 14 would-be renters applying for each available unit.

Following the same trend, the Allentown-Bethlehem area in Pennsylvania emerged as the third-most competitive small market at the start of the year (RCI score 124), mostly fueled by enrollment at the 11 universities and colleges in the Lehigh Valley. In addition, thousands of jobs in distribution and logistics continue to attract workers looking for jobs in manufacturing and warehousing and distribution. Unfortunately, finding an apartment for rent in Allentown-Bethlehem these days is almost mission impossible due to a severe lack of housing. With zero new apartments opened recently and a record lease renewal rate of 80.4%, would-be renters have to be relentless (and lucky) to lock down a rental in this market.

It’s getting harder to find a rental in low-profile markets like Portland, ME and White Plains, NY

Three years since the start of the pandemic, the supply of housing has shrunk dramatically in once low-profile locations. But, aside from the waves of newcomers, economic concerns and out-of-reach houses are keeping aspiring homeowners in rentals, making things even more difficult for apartment seekers.

The housing crunch is particularly noticeable in quiet, little cities like Portland, ME and White Plains, NY. Here, a marked increase in competitivity (up by 32 and 30 points, respectively, compared to the start of 2022) pushed these markets’ RCI scores to 92 and 75, respectively, early this year.

Furthermore, New England’s best-kept secret — the Worcester-Springfield area in Massachusetts — is not so secret anymore. Close enough to Boston, it’s a great fit for budget-conscious transplants from all across the country, but the local housing market is struggling to keep up with demand. As a result, Worcester-Springfield’s competitivity gained 26.5 points since early 2022 to reach an RCI score of 82 at the start of this year.

Renters’ increased interest in Wyoming during the last 12 months is also worth noting. Overall, the state has seen a burst of new residents — including many California transplants — likely seeking a better quality of life and more attractive tax benefits.

Other small-sized rental markets with increased competitivity year-over-year include Wichita, KS; Athens, GA; Jackson, MS; Toledo, OH; Boise, ID; and Des Moines, IA.

Browse the maps below to see the rental competitivity in other regions:

Methodology

RentCafe.com is a nationwide apartment search website that enables renters to easily find apartments and houses for rent throughout the U.S.

To compile this report, RentCafe.com’s research team analyzed Yardi Systems apartment data across 134 rental markets in the U.S. The data comes directly from market-rate large-scale multifamily properties of at least 50 units. Fully affordable multifamily properties were excluded.

The markets were ranked based on a market competitive score. To calculate each market’s score, we ranked them according to five metrics and their averages for October through December 2022: apartment occupancy rate; average total days vacant; prospective renters per vacant unit; renewal lease rate and share of new apartments completed during the same timeframe compared to the existing overall supply at the start of Q4 2022. The same approach was used to calculate the data for Q4 2021.

We then compiled an average ranking by assigning a percentage weight for each metric: 30% for apartment occupancy rate; 15% for average vacant days; 15% for prospective renters per vacant unit; 30% for renewal lease rate; and 10% for the share of new apartments.

In this study, the terms “market,”, “area”, “metro” and “location” are used interchangeably and are as defined by Yardi Matrix markets.

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