- The national average apartment rent in 2016 increased by 4% y-o-y, reached $1,210/month, according to Yardi Matrix
- In 6 U.S. cities renters practically paid an extra month of rent last year
- Sacramento, Stockton and Colorado Springs saw double-digit rent gains in 2016
2016 was full of interesting turns of events, even for renters. In some of the largest U.S. cities, last year was calmer, with rents actually cooling off, while in mid and small-sized markets, the year turned out more eventful, with dramatic rent increases.
In 6 U.S. cities renters practically paid a 13th month of rent in 2016
In some parts of the country renters got more than they bargained for, literally. How would you feel if your landlord asked you to make an extra monthly payment on your 12-month lease? That’s pretty much how renters in Sacramento, CA, Stockton, CA, Colorado Springs, CO, Detroit, MI, Mesa, AZ, and Long Beach, CA feel. Here, the cost of rent in December 2016 increased by more than 9% over the previous December, according to rent stats from Yardi Matrix. On an annual basis, total rent paid in 2016 adds up to the total rent for 2015 plus one extra month of rent. Hence, renters in these 6 cities practically paid the equivalent of 13 months of rent in 2016, as compared to 2015.
Rents in Northern California got plenty of attention last year. Sacramento, CA recorded the largest year-over-year rent increase in 2016, 12.2%, jumping from an average of $1,063/month in December 2015 to $1,193/month in December 2016. Based on the December average rent, the total annual rent amount paid in 2016 in Sacramento exceeded the total paid in 2015 by $1,560, more than an extra month worth of rent. Increasing demand and modest new supply (less than 1% of total stock) have turned the state capital from moderately affordable to unexpectedly expensive for renters.
Following closely is another Northern California town – Stockton. Freshly recovered after the 2008 economic crisis, the city located just outside the pricey Bay Area now boasts the second largest rent gains in the country, 10.6% y-o-y. Stockton is completely lacking in new large apartment developments this year and is witnessing average rents of $991/month, fast approaching the $1,000/month milestone. On an annual basis, the 2016 total rent exceeds the 2015 total rent by as much as $1,140, more than enough to feel like a 13th rent payment this year.
Double-digit rent increases were also recorded in Colorado Springs, CO, a hot but healthy rental market rivaling Denver, its larger neighbor. Prices in this booming town leaped 10% in one year and are showing no intent to slow down. The average rate at the end of 2016 for apartments in Colorado Springs was $1,020 and the total amount of rent for the year exceeded the annual total for the previous year by $1,116, an amount larger than one average monthly rent rate.
Priced well below the national average, Detroit, MI surprised with an annual rent increase of 9.3%. Detroit apartments for rent reached $932/month in December last year from $853/month in December 2015. In total in 2016 renters ended up paying $948 more than they did in 2015, just about the same amount an extra monthly rent payment. One culprit for this sharp increase in rents is the lack in new supply — the city added only 192 new units last year to the local rental market.
Apartment rents in Mesa, AZ may be modest, but not shy – a hefty 9.1% increase year over year brought rents up to $864/month from $792/month one year before. This translates into an additional amount of $864 in rent paid in 2016 by renters who live in Mesa, as compared to 2015.
The coastal town of Long Beach, CA has managed to surpass Los Angeles in growth rate this year. Rent prices here increased by 9% y-o-y, reaching $1,828 as of December this year, from $1,677 the same time last year. When you draw up the totals for the year, rentals in Long Beach, CA cost an extra $1,812 in 2016 versus 2015.
Rents in small markets Riverside, Arlington, Henderson climbed sharply along side big players Detroit, Nashville, Seattle
The national average rent is $1,210 as of December 2016, having grown 4% y-o-y. However, many U.S. cities continue their upward trend at a much faster pace than the national average. Some are larger markets like Detroit, who takes 4th place in the country for sharpest rent increases, with 9.3%. Also, in Seattle, WA a solid 7.2% yearly rent increase pushed the average rent close to the $1,900 mark. Other large cities in the top 20 with fastest growing rents are Nashville, TN (7.3%), Phoenix, AZ (7.1%) and Las Vegas, NV (6.7%).
Small and mid-sized markets, however, fill up the majority of spots in the 2016 top 20 for rent growth. With a 7.9% y-o-y price increase, Riverside, CA rentals outpaced those in nearby Los Angeles, CA (5.7%) in rent growth. In a similar fashion, prices for apartments in Arlington, TX grew 7.5%, much faster than the rates in the larger market of Dallas, TX (5.9%). And Henderson, NV (6.1%) is keeping close to growth rates in Las Vegas, NV (6.7%). One major pain point in some of these increasingly pricier markets is the shortage of supply. In Riverside, CA no new apartment units were opened in 2016 in the large-scale development segment, and in Arlington, TX as few as 304 new apartments hit the market in 2016.
Overheated San Francisco, San Jose, Boston rental markets got a much-needed cool-off
Apartment construction in 2016 has been flourishing in most U.S. metros, partially catching up with demand, and putting the brakes on the out-of-control rents in San Francisco, San Jose, Boston, and other rental markets where rents were shooting up at alarming rates. Rents in San Francisco decreased by 0.9% y-o-y, a welcomed cooling down from last year’s double digit increase. Rents stagnated in San Jose, and grew by a negligible 0.3% in Boston, making for some great news for two of the priciest rental markets in the U.S. Rent is also getting cheaper in Tulsa, OK (with the biggest rent decrease of 1.6%, now at $672/month) and Corpus Christi, TX (with a 0.7% decrease, now at $965/month).
Top-tier coastal cities are most expensive, mid-tier markets in the Midwest are least expensive
While rents have been cooling down in some parts of the country, and overall new apartment inventory was plentiful in 2016, big city renters are still paying top dollar for apartments. Manhattan, NY leads the nation with the most expensive average rent of $4,144/month, followed by San Francisco, CA, where the average rent is $3,360 and Boston, MA, with an average rent of $3,172. It is not surprising that the top 10 highest monthly rents in the U.S. in 2016 were recorded in West and East Coast urban hubs with thriving economies, expanding job markets and a steady influx of young professionals.
The Midwest is the place to be for those looking for cheaper rents. The lowest average rents in 2016 are in Wichita, KS ($631/month), Toledo, OH ($650/month) and Tulsa, OK ($672/month). Indianapolis continues to be one of the few affordable large cities in the nation ($805/month), with rents growing at about the same pace as the national average. Its diversified economy and a cost of living below the national average make the Indiana capital attractive for young professionals and poised for growth in the following years. The only Eastern city on the affordable rent list is Greensboro, NC, where rents went up by 2.9% y-o-y to reach $817/month on average.
All in all, big cities wrapped up 2016 with a downward turn in momentum, while small and mid-sized markets felt the brunt of price hikes like never before.
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 U.S. 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. National rent averages are calculated based on rents from all 124 U.S. markets.
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