Cities in the South and Midwest rank highest for rental affordability and availability, economic growth, and shorter than average commute times, according to a new report from Realtor.com.
“Over the last year, we continued to see strong demand for rental properties, especially among younger generations prioritizing the benefits of renting, like flexibility and relative affordability, while home prices and mortgage rates remain high,” said Realtor.com chief economist Danielle Hale. “Despite high demand, there are some bright spots in the rental market around the United States in cities and towns that offer renters good job opportunities, a decent commute, flexible lease terms, maintenance-free amenities, and more rental options to choose from at relatively affordable prices.”
Austin, Texas, landed in the No. 1 spot, with a rent-to-income ratio of 19.7% and a high rental vacancy at 9%, offering strong affordability and availability for renters. Oklahoma City came in second, with Birmingham, Alabama; San Antonio; and Minneapolis rounding out the top five. Sandy Springs, Georgia; Nashville, Tennessee; Kansas City, Missouri; Raleigh, North Carolina; and Norfolk, Virginia, finished out the top 10.
The average rent-to-income ratio for the top markets is 21%, suggesting rents comprise 21% of a typical household income on average. Among the top 10, Oklahoma City had the lowest rent-to-income ratio at 17.7%, while Nashville had the highest at 23.8%.
According to Realtor.com, a common feature among the top 10 is a favorable rental vacancy rate that allows renters to wield greater bargaining power when negotiating with landlords. For the top 10, the vacancy rate ranges between 5.2% (Norfolk) and 12.3% (Birmingham). Nashville and Austin both rank prominently for rental availability, with vacancy rates at 9.2% and 9%, respectively. This could be attributed to a surge in new multifamily construction and deliveries in the South.
The unemployment rate also can be a factor for renters, with a lower forecasted rate indicating renters might face less competition for jobs. The top 10 markets as a group have an average forecasted unemployment rate of 3.3%, which is lower than the 4% forecasted town/city average. The rate ranges from 2.9% in Minneapolis and Nashville to 3.5% in Birmingham and San Antonio.
In addition to affordability and availability, Realtor.com looked at commute times, which play a role in the quality of life for renters. In the top 10, Oklahoma City, Birmingham, Minneapolis, and Kansas City had the shortest commute times at 24 minutes, while Sandy Springs had the highest at 27 minutes.
No cities from the Northeast or West made it into the top 10. Lawrence, Massachusetts, was the top market in the Northeast, and Denver ranked highest for the West.
