As the summer moving season begins, Miami retains its title as the nation’s hottest rental market, followed closely by suburban Chicago; Northern New Jersey; Grand Rapids, Michigan; and Milwaukee, according to RentCafe’s most recent Rental Competitivity Report.
RentCafe analyzed the nation’s 137 largest markets at the start of the year’s prime rental season, looking at five metrics that impact a location’s competitivity, including occupancy rate; vacant days; prospective renters per vacant unit; renewal lease rate; and the share of new apartments.
On the national level, the Rental Competitivity Index (RCI) score is 73.4, which indicates the market is moderately competitive. According to RentCafe, the rental market is experiencing slightly less strain compared with a year ago, as it’s feeling the effects of new apartment supply. The supply of apartments increased by 0.61% since January, which is in line with a year ago. In addition, 29% of the 137 markets analyzed are showing signs of softening, with longer vacancy periods and more lease renewals.
Nearly two-thirds, or 62.4%, of renters decided to remain in their units at the start of the peak rental season, while 59.7% signed lease renewals one year ago. Vacant apartments also are taking longer to fill at 46 days on average, with only eight prospective renters competing to secure a vacant apartment. That has led to an occupancy rate of 93.3%, down from 94% a year ago.
When comparing the competitiveness of all regions, Florida shines with an overall RCI score of 78.9, followed by the Northeast at 77.1, the South at 75.2, and the Midwest at 74.
Miami ranks first, with a Rental Competitivity Index (RCI) score of 94.1. This is attributed to a high occupancy rate of 96.5%. The share of newly built apartments comprises just 0.55% of the total housing supply at the start of peak rental season, which is almost half of what was added one year ago. According to RentCafe, this has led to 73.6% of apartment renters choosing to renew leases rather than move out. As many as 19 prospective renters are competing for a vacant apartment in the metro, with rental units being filled within 36 days.
Suburban Chicago has jumped to the No. 2 spot, after being in 10th place a year ago. With an RCI score of 83.6, the Windy City suburbs have become popular with millennials. It has a high occupancy rate of 95.2%, with 68.7% of renters deciding to renew their leases. An average of 13 prospective renters compete for each vacant unit, with rental units typically taking 44 days to fill.
Other key findings from the RentCafe report:
- Minnesota’s Twin Cities; Memphis, Tennessee; and the New York boroughs have seen significant year-over-year increases in their RCI score. The Minneapolis and St. Paul market increased 9.2 points to 65.6, driven by more renters signing lease renewals at the beginning of the current rental season. In Memphis, more renters, 63.4%, renewed their leases as well, up 6.1% compared with the same time last year. With limited options, Queens has surged as a trending spot, and Manhattan and Brooklyn also are hotter than they were a year ago;
- In addition to Miami, several Florida markets remain highly competitive. Orlando is the second hottest rental market in the state and the seventh in the nation. The booming population is keeping demand high for apartments but also straining the area’s housing supply. Broward County, Southwest Florida, and Tampa all rank in the top 20 most competitive rental markets at the start of the summer rental season;
- The Midwest boasts affordable living, and the limited inventory can’t keep up with demand. Grand Rapids, Michigan, comes in at No. 4 nationwide, with an RCI score of 82.2. With less than 5% of apartments available and almost no new units added recently, almost 71% of renters have signed lease renewals. Milwaukee is close behind, ranking third in the Midwest and fifth nationally. Kansas City, Missouri, and Omaha, Nebraska, also rank in the top 20;
- Silicon Valley is the hottest rental market in California, moving to No. 6 nationally from 21st place one year ago. According to RentCafe, this can be attributed to a rebound in the tech sector. Orange County and Eastern Los Angeles rank in the top 10, while San Diego sits at No. 18; and
- Pennsylvania’s Lehigh Valley has emerged as the most competitive small rental market. Newly opened units only account for 0.15% of rentals in the metro, and 82.1% of renters have decided to stay put—the highest lease renewal rate of the analyzed markets. Occupancy is at 95.8%. Madison, Wisconsin; Providence, Rhode Island; Fayetteville, Arkansas; and Little Rock, Arkansas, round out the top five for the hottest small markets, followed by Lafayette, Louisiana; Harrisburg, Pennsylvania; Palm Beach, Florida; Worcester-Springfield, Massachusetts; and Jackson, Mississippi.
