- The average U.S. apartment rent rose for the first time in 5 months, reaching $1,315, according to Yardi Matrix.
- San Francisco is finally seeing some relief; rents dropped nearly a full percent since January 2016. This is likely due to an influx of new units in 2016.
- Many of the country’s lowest-rent cities for January were located in either the South or the West.
- Apartments in some of Pennsylvania’s biggest cities cost only a fraction of the national average, with rents in Bristol only $791 per month.
Is the market having déjà vu? Much like last year, 2017 kicked off with a growth spurt in the rental market. Apartment rents rose by $5 in January, bringing the average national rent in the U.S. to $1,315, according to data from research firm Yardi Matrix. This represents the first overall monthly increase in five months, a sign that renters are on the move again, bolstering demand.
Will this growth mirror the trends of 2016, which saw nine straight months of growth? If the construction estimates from last year add up, rent growth may be tempered in many of the country’s largest and most in-demand cities.
No Matter What Size, Prices are Up
Rents are rising for all types of properties. Studio apartments currently average a rent of $1,116, up 0.5% from December and 5% from one year ago. One-bedrooms (which go for $1,186), two-bedrooms ($1,393) and three-bedroom apartments ($1,614) are all up 0.4% from December and 4.6% to 4.8% year-over-year. Last month, rents on all four property types had declined.
It’s possible we may see a serious drop in one-bedroom prices as the year goes on. According to estimates, 51 percent of the rental stock that was projected to hit the market in 2016 consisted of one-bedroom properties. Bigger properties may remain stagnant though, as only 6.8 percent were projected to be three-bedroom units or larger.
On a year-over-year basis, rental prices gained 4.6% nationwide, well above the long-term (8-year) 2.8% average but still below the record high of 7.0% in January 2016, as reported by Yardi Matrix.
The Life of Luxury Just Got More Expensive
In the last 10 years, a whopping 1.2 million wealthy households turned to renting, snapping up luxury apartments left and right. Prompted by renters’ new-found love for upscale apartments and amenity-rich environments, the luxury sector has truly taken off in 2015, with more than 75% of new rental inventory categorized as “high-end”. For renters with an appetite for luxury housing, that growth translated into sweet deals and concessions.
But, after 6 months of relative stability, the effect of luxury oversupply is starting to wear off. Rents on these properties resumed their ascent, rising 0.4% from December and 3.3% from January last year. Now, they weigh in at about $1,568 per month nationally. Three years ago, luxury rents were between $1,300 and $1,350.
S.F. Shares 2nd Spot with Tulsa for Biggest Annual Price Drops while Rents Temper in the South and Midwest
Though renting is getting more expensive all across the U.S., some cities have launched initiatives to balance the scales between luxury and affordable housing, construction-wise. Take San Francisco, where rent costs skyrocketed from 2006 to 2015, causing a citywide housing shortage and blocking many potential renters out of the market. In fact, in 2014, the median renter in San Francisco could only afford a mere 31 percent of available rental units. But 2016 changed all that. By the end of the year, the city had seen its biggest glut of inventory in the last decade, adding almost 10,000 new apartment units — a 126% jump from 2015’s additions. Now, rents are 0.9% lower than they were just one year ago (though they’re still a cringe-worthy $3,378 a month!).
San Francisco aside, the only other cities to see year-over-year rent decreases were Tulsa, Oklahoma, and Corpus Christi, Texas – which saw rents decline a full 2%. These two cities have seen rents drop every month since September 2016.
While no other markets saw decreasing rents, there were a few that had very slow rent growth compared to the bulk of the country; these included Wichita; San Jose; Cincinnati; Houston; El Paso; Manhattan; and Oklahoma City.
California, Florida Coasts See Rising Rent Tides
If you want to avoid increasing rents, you’ll probably want to steer clear of the coasts. California cities like Sacramento, Stockton, Long Beach, Riverside, and Los Angeles all saw significant rent growth over the course of 2016, with Sacramento’s jumping more than 12.5% in just one year. This is likely due to lagging construction and development activity, which stifles inventory and drives rent prices up (and renters out). According to stats, Sacramento added the smallest number of apartments to its inventory last year—a mere 730 units.
Florida cities also came in high for rent growth, with both Miami and Tampa making the list. Other top rent-gainers included Colorado Springs, CO; Detroit, MI; Mesa, AZ; Nashville, TN; Arlington, TX; and Seattle, WA.
On a more positive note, 14 of the nation’s top 20 markets for rent growth saw rents lower than the national average in January, with a large chunk of those located in either the South or the West.
Bristol, Upper Darby Offer Big Savings, Rents Remain Static in Philly
Pennsylvanians are in luck: most of the state’s major cities boast rents that are well below the national average. For the most bang for your buck, head to places like Bristol, where rent is only $791 per month, or Upper Darby, where rent comes in at just $800.
Speaking of Upper Darby, not only does this little town offer the second-lowest rent out of all major cities in Pennsylvania, it also saw the lowest year-over-year change in rents since 2015. Rents rose only 1.3% in Upper Darby over the course of the last year.
If bigger cities are more your style, Philadelphia may be a good choice. While it does have one of the highest average rents in the state ($1,457), at least that rent is consistent. Philadelphia rents grew only 2% in 2016. Other high-cost areas included Exton, where rents averaged $1,534, West Chester ($1,416), and Lansdale ($1,398) – which also saw the biggest year-over-year increase, 5.3%.
Driven by a growing white-collar employment sector and increasing demand from young professionals, Pittsburgh’s apartment market is booming. Rents have increased a robust 4.6% y-o-y, making it the market with the second fastest growing rental prices in Pennsylvania.
Top 3 Most Expensive Rentals in Pennsylvania in January 2017
Monthly Rent: $20,000
Address: 810 Chateau Lane, Villanova, PA 19085
Photo credit: Long & Foster
Monthly Rent: $18,500
Address: 6356 Meetinghouse Road, New Hope, PA 18938
Photo credit: Long & Foster
Monthly Rent: $15,000
Address: 741 Woodleave Road, Bryn Mawr, PA 19010
Photo credit: Long & Foster
NYC, San Fran King in Rents; South, West More Bargain-Friendly
Considering more than two-thirds of the 100 biggest cities are at least moderately rent-burdened, the month’s highest-rent metros come as no surprise. Penthouse-haven Manhattan took the top spot for rent in January, with a whopping $4,154/mo. Other major cities like San Francisco, Boston, and Brooklyn – which boasts more affluent renters than Los Angeles – also made the list, averaging rents between $2,828 to $3,378 per month.
At less than half the nation’s average rent, little-old Wichita, Kansas came in as the most affordable city in the U.S., with a rent of just $626 a month. This marks the fifth month in a row the Kansas town has snagged the top spot.
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|
|2||Colorado Springs, CO||$1,023||0.3%||11.0%|
|6||Long Beach, CA||$1,832||0.3%||9.0%|
|12||Fort Worth, TX||$1,014||1.3%||7.1%|
|13||Kansas City, MO||$921||0.8%||7.0%|
|17||Las Vegas, NV||$904||-0.3%||6.0%|
|18||Los Angeles, CA||$2,176||0.2%||5.7%|
|25||Chula Vista, CA||$1,558||0.1%||5.3%|
|34||St. Paul, MN||$1,149||0.8%||4.8%|
|35||New Orleans, LA||$1,096||-0.3%||4.7%|
|36||Jersey City, NJ||$2,808||1.1%||4.6%|
|43||San Diego, CA||$1,944||0.5%||4.1%|
|45||Santa Ana, CA||$1,756||0.5%||4.1%|
|50||Virginia Beach, VA||$1,129||0.4%||3.5%|
|55||San Antonio, TX||$971||-0.5%||2.9%|
|58||St. Louis, MO||$861||0.1%||2.5%|
|65||San Jose, CA||$2,576||0.9%||1.0%|
|68||El Paso, TX||$750||-0.1%||0.8%|
|69||New York City (Manhattan), NY||$4,154||0.0%||0.5%|
|70||Oklahoma City, OK||$732||-0.9%||0.4%|
|72||San Francisco, CA||$3,378||0.2%||-0.9%|
|73||Corpus Christi, TX||$954||-1.5%||-2.0%|
|75||New York City (Brooklyn), NY||$2,828||0.0%||-|
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.
Fair use and redistribution
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