National Rents See Slowest Season Start in Years, but Most Renter Mega-Hubs Maintain Upward Trend

Key takeaways:

• The national average rent was $1,381 in May 2018, having increased by 2 percent year over year, and by 0.3 percent ($4) month over month, according to data from Yardi Matrix.
• Rents increased in 79 percent of the nation’s biggest 250 cities in May, were unchanged in 17 percent of cities, and dropped in 4 percent of cities compared to May 2017. 
• The top 25 fastest growing rents in the country are in small cities, driven in part by economic growth and population migration.
• Among the largest U.S. cities, the city of Detroit took the number 1 spot with the fastest rising prices in May, followed by Las Vegas and Denver. 

Rent prices rise faster for large unit sizes compared to smaller ones

With more and more families renting, the demand for two and three-bedroom apartments is on the increase, and so are the rents. The national average price to rent a three-bedroom apartment in May was $1,688, up 2.1% year over year, the highest increase of all unit types, while the cost of studio apartments was up only 1.6% over the year. One-bedroom rents were 1.7% more expensive in May 2018 than in 2017, and 2-bedroom apartments were 1.9% more expensive.

The national average rent grew by only 2% in May, the slowest season start since 2010

Renters are looking at an optimistic start of the rental season, as the national average rent in May 2018 was $1,381 per month, an increase of just 2 percent compared to one year prior, the weakest annual growth for this time of the year since May 2010. Month-over-month, national rents grew on average by 0.3%, or $4, since April. Compared to May 2017, when the average rent was $1,354, this year’s rent is $27 more expensive.

A ‘then-and-now’ image of the largest rental mega-markets in the U.S. reveals that prices in Manhattan, Austin, DC, and Chicago are about the same as last year, while in Orlando, Tampa, Las Vegas, Denver, Phoenix, Houston, Los Angeles and Jacksonville, FL, rents are anywhere between 4% and 6% more expensive than one year ago. For those who value predictability and a good dose of moderation, Atlanta, San Antonio, Seattle, Indianapolis, and Dallas fit the bill. Prices in these cities grew by 2-3% in one year, making for easier budgeting. Overall, prices in 16 out of the 20 cities with the largest numbers of rental apartments climbed faster than the national average:

One Year Rent Changes in 20 Renter Mega-Hubs

Small cities and towns across the country are growing in population, jobs, and housing prices, with the top 25 largest increases in rents happening in small markets. Odessa and Midland, TX, are flourishing oil-industry centers, with rent prices skyrocketing by over 35% compared to 2017. Yonkers, NY, maintains its position in the top 5 U.S. cities with the fastest rising rents, posting a whopping 12.9% jump in one year. Reno, NV, has seen one of the largest job gains in the last few years, which has significantly affected the price of rent. Apartments in Reno are 10.7% more expensive than last year as the local rental market is becoming highly competitive. Retiree-magnet Hollywood, FL, maintains its spot in the top 5 for the second month in a row with an 8.5% year-over-year rent increase.

Renters in high-tech job hub Hillsboro, OR, continue to see decreasing rents. Prices in the Portland area have declined by 2.3% compared to May 2017, dropping under last year’s $1,500 monthly average, now at $1,467 per month. Brownsville, TX, has been going through an economic upturn in recent years, yet rental prices are on the downturn, with the average rent 2.2% lower than it was one year prior. Norman, OK; New Orleans, LA; and Thousand Oaks, CA, are also among the top 5 in the U.S. with the most significant year-over-year rent decreases in May.

Large cities: Detroit rents surpass Las Vegas

Rent prices in Detroit are now the fastest rising among the nation’s largest cities, growing at an annual rate of 5.3% as of May 2018, with a monthly rate average of $1,017. Las Vegas rents fall to the second spot, with an annual increase of 5.1% and a monthly average of $981 with room to grow. Denver’s rent climb continues, as rents in the mile-high city have been among the fastest rising in the U.S. for the longest time. Apartments in Denver cost on average $1,566 per month, 4.7% more than in 2017. Renters in Phoenix and Houston are seeing rent increases of 4.4% and 4.2% respectively, compared to the same time last year, the fourth and fifth largest year-over-year increases in the country.

Big city life is getting a bit easier for renters in Manhattan; Brooklyn; Baltimore, MD; Washington, DC; and Austin, TX — the top 5 spots where rents are slowing down the most. Large numbers of new apartments are giving renters more options to choose from, which results in price concessions.

Mid-size cities: Stockton and Tampa see the highest rent increases

Prices in mid-size cities accelerated the most in Stockton, CA (up by 5.6% year-over-year), a side-effect of a job growth spurt in the area in recent years. The average rent for apartments in Stockton in May 2018 was $1,102. Coming in second, Tampa, FL rents rose by 5.5% year-over-year, bringing the average rent to $1,260 per month. Sacramento drops to third place for fastest-growing rents — a tie with midwestern Kansas City, MO — with an annual increase of 4.9%, an improvement for Sacramento renters who have been struggling with fast-rising rents for the past year or so. Fresno, CA, also added a large number of jobs in recent years, drawing demand for rentals and pushing prices up by 4.7% in the last year. The average rent for apartments in Fresno is now above $1,000 per month.

Rent prices fell by 1.5% in New Orleans in May compared to one year prior, possibly due to an influx of new apartments. In Wichita, KS; Tulsa, OK; and Lexington, KY, prices stagnated for the year, while in Cleveland, OH, they rose by only 1.1%, rounding up the top 5 mid-sized cities with the slowest growing rents.

Small cities gain momentum as growth in jobs and population draws rent increases

Much of the growth was concentrated in small cities and towns so far this year, as job numbers are climbing and people are fleeing larger and more expensive cities for more affordable ones. However, these economic and demographic shifts often drive housing prices up in those markets.

The most significant rent increases in May were recorded in Midland and Odessa, TX, but also in Yonkers, NY; Reno, NV; and Hollywood, FL. Other small markets struggling with rising housing prices are Boise, ID; Ontario, CA; Lancaster, CA; Peoria, AZ; and Rialto, CA, where rents have increased by more than 7.5% year-over-year.

According to Doug Ressler, Director of Business Intelligence at Yardi Matrix, one of the main reasons the fastest growing rents in the country are in small cities is due to population mobility. If the “Value of Work” undergoes dramatic change and there is significant wage growth, the result will be an increase in mobility. However, individual salary and wages have and continue to experience only modest increases. Housing demand due to population growth in the secondary and tertiary markets combined with lack of housing stocks shows greater gains than urban cores due in part to decreased mobility.

On the flip side, rents slowed down the most in Hillsboro, OR; Brownsville, TX; Norman, OK; Thousand Oaks, CA; and Alexandria, VA. Apartments for rent in Miramar, FL; Arlington, VA; Richardson, TX; College Station, TX; and Pembroke Pines, FL, are also getting cheaper. The rental market in the greater Washington, DC, area appears to be cooling, including Washington, DC, proper, Alexandria, Arlington, Hampton, Newport News and Chesapeake.

Manhattan remains the most expensive place to rent an apartment in the U.S., with an average rent of $4,063, unchanged from the previous month. San Francisco rents went up $11 since April, reaching $3,453 per month, making it the second most expensive city for renters in the country. Apartments for rent in Boston rank third by price, with an average monthly rate of $3,282, $27 more than April rents. Rental prices in San Mateo, CA, take the 4th spot, with an average rent of $3,170 from $3,162 last month. Student town Cambridge, MA, remains the fifth most expensive to rent in, with an average rent of $3,040.

Among the 250 cities analyzed, Wichita has the cheapest apartments, with an average rent of $634/month in May, followed by apartments in Tulsa, OK, where the average rent is $669. Brownsville, TX apartments cost $672 on average, down $13 since April. El Paso, TX, entered the top 10 list of most affordable cities for renters in May, with an average rent of $743, pushing out Fort Wayne, IN. Rents in El Paso have barely changed over the year, with a 0.7% increase. Memphis, TN; Kansas City, KS; and Warren, MI, are also among the cities where rents cost less than $800 per month, on average.

Check out the average price of rent in your city, from Philadelphia to Miami, Raleigh to Cincinnati, by using this interactive table:

Methodology:

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 250 cities in the US. The report is exclusively based on apartment data related to buildings containing 50 or more units. Our report includes cities with populations over 100,000 and a rental stock of at least 2,900 apartments in 50+ unit buildings.

In this report, large cities are cities with a population of 600,000 people or more, mid-sized cities are cities with a population between 300,000 and 600,000, and small cities are cities with a population of less than 300,000. 

Rent data was provided by Yardi Matrix, a business development and asset management tool for brokers, sponsors, banks and equity sources underwriting investments in the multifamily, office, industrial and self-storage sectors. 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.

Starting with the January 2017 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 130 markets across the U.S., as reported by Yardi Matrix.