Demand for rentals is surging. Hopeful tenants are competing for apartments in regions with 95% occupancy or higher. These are the hottest large and small rental markets in the country.
The cost of rent has officially become a burden for Americans: Tenants are now paying an average of 30% of their income on rent.
Demand for apartments has surged, driving rates sky-high, according to a recent housing affordability report by Moody’s analytics, which says that hopeful homebuyers, squeezed out of the market by rising mortgage rates, has caused many would-be buyers to remain renters, and wage growth hasn’t kept up with rising rents.
Supply of apartments can’t keep up with the demand, and some rental markets remain dauntingly competitive. In an analysis of 134 of the largest rental markets in the U.S., nationwide apartment search site RentCafe found that eight of the country’s top 20 hottest renting spots are in the Northeast.
This is supported by Moody’s, which says that post-pandemic reverse migration in 2022 brought people back to the Northeast region, fueling above-average rent growth. By the end of last year, the average renter in the Northeast was shelling out 27.9% of their income on rent.
In the start of 2023, vacant U.S. apartments were occupied within 38 days, on average, with eight prospective renters competing for each available apartment amid an occupancy rate of 94.2%, RentCafe found. At the same time, 60.7% of apartment dwellers renewed their leases. Newly opened apartments accounted for just 0.43% of the nation’s housing supply.
In their ranking of the most competitive rental markets, RentCafe found that North Jersey is the most competitive rental market in the U.S., with an occupancy rate of 96.6% and as many as 12 hopeful tenants competing for each vacant apartment, outpacing the Sunbelt.
Even in small, low-profile markets across the U.S., apartments are tough to find. Lafayette, Indiana, is America’s hottest small-sized rental market, according to the analysis. The area is home to Purdue University, which set a record for enrollment at 50,884 students in the fall.
To determine the hottest rental markets in the country, RentCafe’s research team analyzed apartment data from Yardi Systems, a property management software company, across 134 rental markets in the U.S.,using five metrics and their averages for October through December 2022: apartment occupancy rate; average total days vacant; prospective renters per vacant unit; renewal lease rate and share of new apartments completed during the same timeframe compared to the existing overall supply at the start of Q4 2022. They used the data to assign each area a market competitive score, then ranked based on the score.
The data comes directly from market-rate large-scale multifamily properties of at least 50 units.
Here are the 15 hottest large rental markets and the 15 hottest small rental markets, according to RentCafe. The small markets are those that have under 20,000 apartments eligible for analysis.
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