- The average U.S. apartment rent decreased by $9 in February, reaching $1,306 according to Yardi Matrix.
- Luxury rents have dropped for the month, hitting $1, 554. This marks a nearly 1% decrease over January.
- California cities make up the bulk of the rent-growth list, with eight of the top 20 cities located within the state’s borders. Stockton and Sacramento took the No. 1 and No. 2 spots.
- San Francisco, though still boasting one of the nation’s highest rents, saw the biggest y-o-y rent drop in the nation for February, decreasing 3.6% over the year.
It seems the recent increase in new construction is creating volatility in the apartment market, cooling down rents across the country – and even in some of the nation’s most in-demand cities such as Washington, DC, Chicago, and Portland.
Overall, rents dropped by $9 in February, reaching $1,306 on average, as reported by Yardi Matrix, while historically tight markets like San Francisco, Houston, Boston, San Jose, and New York all saw average rents drop as well.
Recent construction has also led to a surplus of luxury units in many major metropolises, and that means a loosening market there, too. Like the national average, rents on luxury properties also dropped for the month, reaching their lowest point in since mid-2016.
Stability is the Name of the Game for All Units
In keeping with national rent trends, by-size rent costs remained fairly stable on all property types for February. Two-bedroom and three-bedroom units saw literally no change in price over January – hitting $1,385 and $1,606, respectively – while studio apartments and one-bedroom units jumped just 0.1%, coming in at $1,165 and $1,182.
Over the year, all sized units saw roughly the same price increase; studios jumped 3.8%, one- and two-bedrooms rose 3.4%, and three-bedrooms went up by 3.3%. Despite a large influx of one-bedroom properties reported to hit the market last year, there has yet to be a significant price drop on these – or any other sized property – in recent months.
Luxury Rents Get Less Luxurious
Though national rents decreased by just $9, luxury rentals saw a slightly more significant price drop. The average luxury rent was $1,554 for February – down nearly a full percent from last month’s $1,568. The last time luxury rents were at a similar price point was in April 2016.
In January, luxury rents rose 0.4% over the previous month and more than 3% annually. Before that, luxury rents saw six months of stability, hovering in the low-$1,550s thanks in large part to an influx of high-end properties that hit the market in 2015. There’s no telling if 2017 will see a similar luxury market, but February’s slight dip is promising for the 1.7 million wealthy households that currently rent.
San Francisco Rents Continue Downward Trend; Southern Cities Reign Most Affordable
With a history of apartment shortages, rent hikes and unaffordability, San Francisco has never been known as the ideal renter’s market. But according to recent data, that could be poised to change. In fact, the city saw the biggest year-over-year drop in rent prices in the entire nation last month, decreasing 3.6%. Optimism should be tempered, of course. The city’s average rent of $3,300 comes in well above the national average and significantly more than its own average rents just 5 years ago. Still, February’s numbers do spell an improving market on the horizon.
San Fran aside, the South came in as February’s best region for rent growth – or in these cities’ cases, rent drops. Tulsa and Oklahoma City, Oklahoma, saw 2.2% and 1.9% rent drops respectively, while Corpus Christi, Texas, saw a 2% decrease as well. All three came in well under the national average rent, with Tulsa’s at just $667 per month. Other cities to see rent drops over the year were Houston and El Paso, Texas; Oakland and San Jose, California; Manhattan; and Boston.
California Cities Line List of Top Rent Growers; Small Towns Mesa, Fort Worth, St. Paul Jump, too
As usual, many of California’s bigger cities came in at the top of the rent growth list, with Stockton and Sacramento locking down the No. 1 and No. 2 spots. Stockton’s rent jumped 12.3% over the year, while Sacramento’s rose 10.7%. Another six California cities made the top 20 list, including Riverside, Anaheim, Fresno, Long Beach, Los Angeles, and Chula Vista.
The bigger story is the smaller, less populated cities that are seeing serious rent growth, like Mesa and Phoenix, Arizona; St. Paul, Minnesota; Nashville, Tennessee; and Fort Worth, Texas. Mesa actually saw a 6.6% increase year-over-year, while Fort Worth and St. Paul both came in at or over the $1,000 mark. Just one year ago, a one-bedroom unit in Fort Worth cost just $811.
“Much of the recent growth in secondary markets is the result of a combination of economic and supply factors”, says Yardi Matrix senior analyst Doug Ressler. “While demand for apartment living is robust, many of these markets lack adequate supply and rents are rising accordingly.”
“Moreover, renting becomes a more viable alternative to homeownership as the rise and the potential future rise in interest rates is a higher (more difficult) barrier for the first-time home buyer,” he added.
The increasing population migration to Texas and the Southeast markets – mainly supported by the attractive employment sector (millennials) and low cost of living (retiring boomers) – is expected to keep pushing rents up in fast-growing cities such as Fort Worth, Nashville, and Phoenix.
NC Sees Serious Rent Growth; Red Flags Go Up in Chapel Hill
All eyes are on North Carolina after the state saw a jaw-dropping month for rent growth in February. Little Gastonia experienced a 9.3% jump in rents, while Chapel Hill rose more than 6%. The latter is worrisome for NC renters; with an average rent of $1,257 per month, it’s already the most expensive rental market in the state. Throw in a speedy rent growth rate, and it could spell an affordability problem for many of the city’s residents. The growth could be due, in part, to the city’s job market, which Forbes recently ranked No. 1 for those in healthcare fields.
Fortunately, Charlotte remains a haven for NC renters, with an average rent of just over $1,100 and a glut of readily available inventory around town. The city saw an increase of just 2.9% for the year – well below the national average. As far as rent growth goes, Burlington and High Point saw the least year-over-year change, coming in at $827 and $752 per month, respectively.
Top 3 Most Expensive Rentals in North Carolina in February 2017
Monthly Rent: $10,000
Address: 1001 Colville Road, Charlotte, NC 28207
Photo credit: Point2 Homes
Monthly Rent: $7,500
Address: 2512 Lewiswood Lane, Raleigh, NC 27608
Photo credit: Point2 Homes
Monthly Rent: $6,675
Address: 1351 E. Morehead Street Charlotte, NC 28204
Photo credit: RentCafe
Tides Rise on NE and Cali Coasts; Head Inward for Affordability
The nation’s most expensive rents are no surprise, with uber-populated urban hubs like Manhattan, San Francisco, and Boston taking the top three spots. The rest of the top 10 is filled with Northeastern metropolises (Jersey City, Brooklyn, and Washington D.C.) and California beach towns (San Jose, Oakland, Los Angeles, and San Diego.)
Head inward from those expensive coasts, and you’ll find the nation’s more affordable places, like Wichita, Kansas, which once again took the cake for lowest rent prices in the country. The city averaged just $629 for February (down $2 over last month) and was No. 1 in affordability for the sixth month running. Rounding out the list of most affordable cities were Toledo, Ohio; Tulsa and Oklahoma City, Oklahoma; El Paso, Texas; Tucson, Arizona; Indianapolis; Albuquerque, New Mexico; and Greensboro, North Carolina.
See where your city stands when it comes to rent growth and average rent prices by checking out this table:
|Rank||City||Average Rent||Change M-o-M||Change Y-o-Y|
|3||Colorado Springs, CO||$1,014||-0.5%||9.5%|
|11||Chula Vista, CA||$1,577||0.4%||5.7%|
|13||St. Paul, MN||$1,155||0.7%||5.4%|
|14||Los Angeles, CA||$2,196||0.6%||5.4%|
|17||Long Beach, CA||$1,808||-1.0%||5.2%|
|18||Las Vegas, NV||$906||0.1%||5.2%|
|19||Fort Worth, TX||$1,000||-0.1%||5.2%|
|24||Kansas City, MO||$912||-0.7%||4.3%|
|29||Santa Ana, CA||$1,765||0.1%||4.0%|
|31||San Diego, CA||$1,932||-0.6%||3.7%|
|37||Jersey City, NJ||$2,799||0.7%||3.1%|
|43||New Orleans, LA||$1,085||-0.2%||2.6%|
|45||San Antonio, TX||$969||-0.1%||2.4%|
|59||Virginia Beach, VA||$1,113||-0.6%||1.0%|
|60||St. Louis, MO||$859||-0.2%||0.9%|
|67||El Paso, TX||$741||-0.5%||-0.7%|
|68||San Jose, CA||$2,548||-0.1%||-0.7%|
|69||New York City (Manhattan), NY||$4,094||-1.2%||-0.9%|
|70||Oklahoma City, OK||$720||-0.6%||-1.9%|
|71||Corpus Christi, TX||$956||0.0%||-2.0%|
|73||San Francisco, CA||$3,342||-0.5%||-3.6%|
|74||New York City (Brooklyn), NY||$2,700||0.4%||-|
About RENTCafe and How We Compiled the Data
RENTCafe is a nationwide apartment search website that enables renters to easily find apartments and houses for rent throughout the United States.
To compile this report, RENTCafe’s research team analyzed rent data across the 75 largest cities in the US. The report is exclusively based on apartment data related to buildings containing 50 or more units.
Rent data was provided by Yardi Matrix, an apartment market intelligence source and RENTCafe’s sister company which researches and reports on all multifamily properties of 50+ units across 124 markets in the United States. Rental rate coverage is for Market Rate properties only. Fully Affordable properties are not included in the Yardi Matrix rental surveys and are not reported in rental rate averages.
Based on Yardi Matrix’s definition and classification of the apartment market by rental household segments, high-end or luxury rental properties are those that fall into the discretionary (Class A+/A) and high mid-range (Class A-/B+) class categories.
Starting with the January rent survey, Yardi Matrix is using a methodology that incorporates more properties into the sample which caused slight changes in overall rents and year-over-year changes compared to the previous reports. We expect this methodology adjustment to produce more accurate averages at the national and metro levels.
*National averages include 124 markets across the US, not just the 75 cities featured in the report.