- On a year-over-year basis, the average apartment rent grew 4.7% nationwide in September 2016
- Rents decreased 0.1% from August to September, now resting at $1,219
- 3 cities saw double-digit rent increases over the past year: Sacramento, Oakland, and Colorado Springs
- Corpus Christi and Tulsa are the only 2 large cities where rents are actually falling
Prompted by an ever-growing renter pool, strong job growth, and high demand for rental housing, the U.S. apartment market is thriving. Over the past year, national rents* rose by 4.7% (or $54). Meanwhile, new apartment construction is at a 10-year high, with more than 320,000 rental units expected to come online in the country’s 50 biggest metros this year, a 50% increase from 2015.
September, however, marked the first month of deceleration in rent growth. After 9 months of record-breaking increases, the runaway growth came to an abrupt halt. The national average rent actually fell in September to $1,219, a 0.1% decline from August 2016, according to data from Yardi Matrix.
Rent growth was flat from August to September for the three major property types (studios, 1-, and 2-bedroom apartments), with three-beds recording a slight decrease from last month. On an annual basis, rents are still on the rise though, for all property types. Studios rent for an average of $1,067, 1-bedrooms command $1,096 on avg., 2-bedrooms average at $1,294, and three-bedrooms go for $1,511/mo.
| Bedroom|| Avg.|
Renters Seeking Lifestyle-Oriented Apartment Living Need Ultra-Deep Pockets: Luxury Rents Increased 4% Year-Over-Year
Following the recent uptick in high-end apartment construction, many people have felt the pinch of rising rents, not only in mature luxury markets such as NYC, LA, or Chicago, but in other major cities as well, including Denver, Dallas, Charlotte, Atlanta, and Tampa. Luxury apartments come with top-notch amenities, from resort-style pools and rooftop farms to bark parks and concierge services; and prices to match, naturally. The average rent for a high-end apartment is now $1,415, up 4% y-o-y. The good news however, for those hung up on luxury living, is that in September rents have seen a slight decline from last month (-0.2%), mostly thanks to the large number of new high-end apartments entering the market.
Top 3 Most Expensive Rentals in the U.S.
Monthly Rent: $500,000
Address: 795 Fifth Avenue, 39 floor, New York, NY 10065
Photo credit: Point2 Homes
Monthly Rent: $375,000
Address: 9505 Lania Lane, Los Angeles, CA 90210
Photo credit: Point2 Homes
Monthly Rent: $300,000
Address: 795 Fifth Avenue, Unit 393, New York, NY 10065
Photo credit: Point2 Homes
California Dominates Y-o-Y Rent Growth with 8 Cities Making the Top 20 Fastest-Growing Rental Markets List
In a surprising twist, it’s less hyped cities that take the lead as the nation’s fastest growing markets in September. The heightened pace of construction that saw thousands of new apartment units delivered to historically tight markets such as San Francisco, Washington DC, and NYC has finally put a damper on rent growth, giving renters in those cities some room to breathe. Meanwhile, cities where development activity lags behind demand, such as Sacramento and Portland, will keep renters struggling with staggering rent increases and limited supply – the perfect recipe for an affordability crisis.
Nowhere did rental prices rise faster in the past year than in California’s capital where the average rent has climbed 12.3% to $1,169. The employment picture is improving in Sacramento and population growth is expected to accelerate, but rental inventory lags behind. Sacramento will only see the addition of 730 units in large-scale developments in 2016. This actually represents a 30% decrease compared to 2015 when ~1,000 units hit the market.
Though significantly cheaper than San Francisco, Oakland does not spoil renters with many affordable apartment options either. On the contrary, as it slowly becomes the go-to place for those priced out of San Francisco’s overly-competitive housing market, this newly-trending urban hotspot calls for higher rent prices. In fact, among the nation’s 75 largest cities, Oakland rents have seen the second-highest jump year-over-year – a staggering 11.9%.
Colorado Springs is also gaining popularity among young professionals who seek to take advantage of the city’s flourishing economy. Coupled with a dearth of available apartment options, the growing interest in renting among Millennials has pushed rental rates up 10% over the past year. Another western market that’s benefiting from an active business sector, Arizona’s city of Mesa (Phoenix Metro) sees rent pressure increasing. The average rent for Mesa apartments – now pegged at $859 – has grown an impressive 9.8% from the same period in 2015.
The biggest surprise though comes from Houston, the millennial-magnet Texas hub that added more than 40,000 new residents last year – the second-largest numeric population increase in the nation. Not only is Houston one of the best places to raise a family, do business, and enjoy the outdoors, its rental market is also pocket-friendly. At $1,063, the average rent in Houston is well below the national average; moreover, it has only increased a meager 2.6% year-over-year.
Cleveland Outpaces Boston, Jersey City in Rent Hikes, Yet City Still Affordable
Finally some good news for Boston renters: it looks like supply is catching up with demand, at long last, and the overheated market is starting to cool off. Thanks to its growing rental inventory, Boston had growth of less than 2.5% y-o-y, which puts it near the bottom of our rankings, right below Cleveland. On the other hand, even though Cleveland’s rents appear to be growing faster than Boston’s, Cleveland remains one of the best cities for budget-conscious renters. The average rent in Cleveland sits somewhere around $949/mo., not cheap but way cheaper than Boston where renters shell out an amazing $3,191 on avg. on housing every month.
Of the 75 biggest cities in the nation, two cities – Tulsa and Corpus Christi – are going against the current, with rents losing steam for a change. The average rent has actually decreased by 0.3% in Tulsa and 1.6% in Corpus Christi.
California Rents Still on a Roll But Growing Inventory Cools San Francisco Rental Market
The heated economy and low vacancy levels have pushed San Francisco rental rates through the roof in recent times. The City by the Bay is one of the nation’s most expensive markets (big shocker, right?!), second only to Manhattan, with apartments in the city going for $3,472 on average. But rents have finally started to cool off, with a sluggish 3.9% rent increase y-o-y, mainly supported by rising apartment completions. Nearly 9,500 new apartment units will be delivered in 2016 throughout the city, the highest point of inventory growth in terms of sheer volume over the last 10 years and a 126% increase compared to 2015’s completions, according to our recent report on new apartment construction.
However, renting is rapidly getting more expensive in Sacramento, Oakland, and Long Beach, as well as Anaheim and Los Angeles, the 5 cities with the fastest growing rents in California as of September 2016.
Top U.S. Cities with the Highest and Lowest Rental Prices
Much like renters in other hot markets such as San Francisco and Boston, Manhattan renters have long forgotten the “30% of income on rent” rule of thumb and end up paying more than half their monthly income on housing. Nationwide, the number of cost-burdened renters reached 21.3 million in 2014, with 11.4 million of these households paying more than half their incomes for housing. San Franciscans shell out $3,472 per month on average while Manhattan renters have to dig even deeper into their pockets, with average rents sitting somewhere around $4,083.
Part of the reason why this is happening is that many of the new apartment projects being built today are geared toward higher-end, luxury renters. In fact, 3 out of 4 new apartments built in 2015 in the US were high-end. Obviously, Manhattan has a penchant for luxury housing and rentals are no exception. Continuing a trend observed in 2015 and 2014, luxury apartments will make up more than half of the new rental stock coming online this year – approx. 3,300 units.
At the other end of the spectrum, renters in Oklahoma City, Tulsa, and Toledo may call themselves lucky as their monthly rents are among the smallest in the nation. The cheapest big city to rent an apartment in the US is – drum roll, please! – Wichita, Kansas. An average apartment is Wichita is nearly 7 times cheaper than Manhattan’s average apartment home.
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||$997||-0.1%||10.0%|
|9||Long Beach, CA||$1,810||-0.5%||9.1%|
|14||Chula Vista, CA||$1,563||0.1%||7.6%|
|16||Fort Worth, TX||$996||0.6%||7.3%|
|19||Los Angeles, CA||$2,132||0.7%||7.0%|
|23||Kansas City, MO||$901||0.4%||6.9%|
|24||Las Vegas, NV||$891||0.3%||6.8%|
|28||Santa Ana, CA||$1,753||0.9%||6.4%|
|31||San Diego, CA||$1,964||0.8%||6.1%|
|40||St. Paul, MN||$1,126||-0.3%||4.9%|
|45||St. Louis, MO||$876||0.7%||4.7%|
|49||New Orleans, LA||$1,100||0.2%||4.3%|
|52||San Francisco, CA||$3,472||0.1%||3.9%|
|56||Virginia Beach, VA||$1,120||-0.1%||3.3%|
|57||San Antonio, TX||$967||-0.7%||3.3%|
|65||Jersey City, NJ||$2,779||0.7%||1.5%|
|67||Oklahoma City, OK||$729||-1.2%||0.7%|
|68||San Jose, CA||$2,526||-1.6%||0.6%|
|70||El Paso, TX||$751||0.4%||0.0%|
|72||Corpus Christi, TX||$955||-0.8%||-1.6%|
|73||New York City (Manhattan), NY||$4,083||0.0%||-|
|75||New York City (Brooklyn), NY||$2,550||0.0%||-|
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 123 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.
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