- Supported by record high apartment completions, the national rent continues to decrease for the third consecutive month to $1,214 in November
- The average apartment rent gained 4.3% nationwide year-over-year
- 2 California cities – Sacramento and Stockton – lead the way in annual rent growth, followed closely by Colorado Springs
- Wichita, KS and Toledo, OH are the cheapest cities to rent across the U.S.
Ready for some good news? The overheated rental market is finally cooling down, with rents losing speed for the 3rd straight month in November. The U.S. average apartment rent has dropped by $2 from October and $5 from the August high to reach a refreshing $1,214 in November, as shown by recent data from Yardi Matrix.
November marked slight price decreases across all major rental property types. Average rents for studios dropped by 0.5% in November, clocking in at $1,059. Rents for one-bedroom and two-bedroom units decreased by 0.2%, with averages around $1,093 and $1,287 per month, respectively. Three-bedroom units saw the biggest price cut – a 0.6% drop from last month – and now command $1,497.
On a year-over-year basis though, average rents for all property types saw significant gains, from 4.0% for a three-bedroom to 4.5% for a one-bedroom unit.
|Bedroom Type||Average Rent||Change M-o-M||Change Y-o-Y|
Luxury Rents Continue Downward Dive, Lose $7 in November
When developers started building more, the luxury market was the first to be impacted. In 2015, 75% of all apartments in large-scale developments were high-end. That’s 3 out of 4 apartments! The good thing for renters – apart from getting to live in upscale buildings with rooftop farms and concierge services – is that with all these new options, renting is becoming less competitive and somewhat more affordable, even in above-the-norm apartment communities.
In November, the third month for consecutive rent decreases for high-end apartments, the national average dropped to $1,401, down 0.5% from October and 1.2% from the $1,418 all-time high recorded in August.
Rent Growth Marathon Hindered by Apartment Building Bonanza in San Francisco, Boston, Houston
The huge wave of new apartments overflowing the nation’s biggest urban hubs is not without echo on the rental prices side. Cities where supply is finally catching up with demand have started seeing rent moderation; with a staggering 126% increase in new unit deliveries in 2016, San Francisco is perhaps the biggest surprise – the pleasant kind of surprise for a change – of our November rankings as it comes first in month-over-month price drops and second in annual decreases. Rents in the City by the Bay have fallen 1.6% from October and 1.2% from the same time last year (in November 2015, San Francisco was the second fastest growing rental market in the U.S. with rent growth topping 11%).
The flood of new supply also hit Boston and Houston which rank 7th and 8th on our list of cities with the slowest growing rents Y-O-Y. With approximately 7,600 new units to be delivered by the end of 2016, Boston rents fell 0.5% from October and only increased 1.1% from the same time last year. Projections for 2017 still look good, just not as good as renters would like to hear. The Boston market may be going through a “false positive” slowdown right now, with rents expected to resume their upward trend early next year and show a flat steady 3.6% – 3.8% Y-O-Y rent growth in 2017.
“There has been a huge increase in supply and the supply has come on in areas where new construction has been constrained in previous years such as Downtown Crossing, Charlestown, and Chelsea”, said Yardi Matrix senior analyst Chris Nebenzahl. “I think it will take some time for these areas to absorb the new housing but it will not take too long, as the city expands and gentrification continues.”
“Moreover, professional and business services and the health and education sectors comprise the two largest employment segments in Boston. Many of the education services are private institutions charging upwards of $50,000+ per year”, he added. “Many of the students at these universities come from affluent backgrounds, plus they include a strong international student body in Boston who are endowed and can afford to pay more in rent to get into top-notch apartment communities. In the core and surrounding areas, single people are finding roommates and renting larger layouts so they can afford living in luxury or well-located units.”
Even with the new supply being added, occupancy is high across the board in Boston, currently at 95.6%, which will possibly translate into rents picking up the pace by mid-year 2017.
Houston – which will see an impressive 26,000 units added to its rental stock this year – is experiencing substantial moderation in rent growth, pegged at 1.6% y-o-y in November. Moreover, Houston rents are smaller from the get-go, especially compared to other job-oriented, millennial magnet cities. A Houston apartment now rents for $1,055/mo., well below the national average.
Corpus Christi, TX and Tulsa, OK emerge as the best cities for renters looking for a relaxed (read: cheap and getting cheaper) housing picture. Those two rank in the top cities for price drops for the third consecutive month since September. In November, renters looking for good deals in the Sparkling City by the Sea paid on average 1.4% less (or $962) for an apartment, while average rents in Tulsa dropped 0.9% from the same period last year, reaching $677 in November.
Year-Over-Year Rent Growth Keeps West Coast Renters Struggling, with Sacramento, Stockton, Colorado Springs at the Forefront
Although rents continued to drop at a moderate pace during the last three months, on a year-over-year basis rental prices gained a solid 4.3%. The rental market bull’s run seems to be slowing down in major cities only to make room for growth in smaller markets where demand can’t be satisfied by the limited inventory levels, creating the perfect background for incessant rent hikes.
With a meager 730 new units scheduled to see the light of day in 2016 and growing demand for apartment living, Sacramento rents continue to grow at the fastest rate in the nation. The City of Trees is the top city for year-over-year rent growth with a double-digit increase in rents in 2016, an unsettling 11.6% that translates into an average rent of $1,179 in November.
Hot on the heels of Sacramento, Stockton reached 11.2% in rent appreciation, with an average $990 per unit. Colorado Springs follows close behind with a 10.1% rent increase in November, a 0.8% gain since last month.
Although apartment completions are at a record high in the DFW Metroplex, with more than 23,000 new apartments scheduled for delivery in 2016, rents are still not slowing down, mostly prompted by the thriving job market and sizzling demographics.
Renters who want to live the Texan lifestyle have to pay north of $1,000 for an apartment in DFW, with rents up a worrying 6.6% in Fort Worth and 6.2% in Dallas year-over-year. On the positive side, though, incomes seem to be keeping up with rent growth. The number of high-income renters in Fort Worth grew by 77% in 2015 compared to 2014, the largest increase in wealthy renters in the entire country.
Tampa Leads Florida in Fastest Growing Rents, Beats Out Miami with 6.1% Increases Y-O-Y
Florida’s rental market is sizzling hot, fueled by an uptick in jobs across all sectors and growing population. Miami, the Sunshine State’s traditional powerhouse, has dusted itself off from the Great Recession and is now serenading “Bienvenido a Miami” to long-lost trade friend Cuba. Rents across the city gained a solid 5.7% (or $84) in November from the same period last year, and now command $1,552 on average.
Surprisingly enough, the Magic City is outpaced by two less-hyped Florida cities when it comes to rent growth rates. Tampa rents increased by 6.1% in November on a year-over-year basis, reaching $1,159 on average for an apartment. Gainesville follows close behind with a 6.0% gain from the same period last year. Apartments in Gainesville command $1,096 per month.
When it comes to the actual dollar amounts that renters shell out on housing every month, Miami is still at the forefront, with rents having gained $84 over the past year. Boca Raton comes in second, with an $81 increase in rents y-o-y, followed by Fort Lauderdale where renters are paying $79 more per month on rent than they did a year ago.
Top 3 Most Expensive Rentals in The State of Florida in November
Monthly Rent: $300,000
Address: 5446 N Bay Rd, Miami Beach, Florida 33140
Photo credit: EWM Realty International
Monthly Rent: $150,000
Address: 14 Star Island Dr, Miami Beach, Miami-Dade County, FL 33139
Photo credit: Point2 Homes
Monthly Rent: $150,000
Address: 10 Palm Ave Miami Beach, Florida 33139
Photo credit: EWM Realty International
Top U.S. Cities with the Highest and Lowest Rental Prices
While the apartment market is slowing down nationwide, renters in high-flying cities still feel the financial burden of overly-expensive apartments. According to our most recent research of U.S. Census Bureau and Yardi Matrix data, more than two thirds of the 100 biggest US cities are moderately rent-burdened, meaning that the median rent takes up between 30 and 49.9% of the median income.
Already outrageously expensive, Manhattan scores new highs in monthly housing costs. Although the borough follows the national downward trend in month-over-month rent changes – posting a 0.5% decrease since October – apartments here are still the priciest in the country. Renters who want to live in New York City’s most glorified borough need to shell out $4,146 on avg. every month.
San Francisco lands in second place for most expensive apartments in the US, with rents clocking in at $3,343 while Boston holds strong at no. 3, testing renters’ pockets on a monthly basis with an average rent of $3,176.
Compared to these, rent prices in some cities seem veritable bargains. Wichita, KS is crowned as the cheapest big city for renters in the U.S. with rents commanding $630 on avg., while the average rent in Toledo, OH is $655.
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||$1,018||0.9%||10.1%|
|4||Long Beach, CA||$1,825||0.2%||9.0%|
|13||Las Vegas, NV||$900||0.1%||6.6%|
|14||Fort Worth, TX||$1,001||0.6%||6.6%|
|22||Kansas City, MO||$906||-0.2%||5.5%|
|25||Los Angeles, CA||$2,147||-0.3%||5.3%|
|26||Santa Ana, CA||$1,754||-0.2%||5.3%|
|30||Chula Vista, CA||$1,553||-0.6%||4.9%|
|37||St. Paul, MN||$1,135||0.3%||4.6%|
|40||Virginia Beach, VA||$1,135||0.9%||4.4%|
|43||San Diego, CA||$1,941||-0.9%||3.7%|
|45||New Orleans, LA||$1,094||0.6%||3.7%|
|56||San Antonio, TX||$970||-0.4%||2.6%|
|61||St. Louis, MO||$858||-0.7%||2.0%|
|63||Jersey City, NJ||$2,764||-0.5%||1.9%|
|67||San Jose, CA||$2,548||-0.4%||0.4%|
|68||Oklahoma City, OK||$727||-0.5%||0.0%|
|69||El Paso, TX||$749||-0.9%||-0.1%|
|71||San Francisco, CA||$3,343||-1.6%||-1.2%|
|72||Corpus Christi, TX||$962||-0.5%||-1.4%|
|74||New York City (Manhattan), NY||$4,146||-0.5%||-|
|75||New York City (Brooklyn), NY||$2,819||0.6%||-|
Change in Nominal Wage vs Average Rent
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.
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.
*National averages include 123 markets across the US, not just the 75 cities featured in the report.