Miami continues to reign as the nation’s hottest rental market, with Midwest multifamily markets closing in, according to RentCafe’s year-end Rental Competitivity Report.
RentCafe analyzed the nation’s 139 largest markets for 2024, 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 74.4 out of 100, which indicates the market is highly competitive. According to RentCafe, high renewal rates are keeping competition tight. Nationwide, nine prospective renters are competing for each available apartment, taking an average 40 days for the unit to be rented.
The supply of apartments increased by 2.59% this year, which is above last year’s 1.89%. However, supply is still a pressing issue, with lease renewal rates at 62.2% this year, up from 60.2% in 2023. In addition, occupancy rates nationwide are at 93.6%, just slightly under last year’s 94%.
When comparing the competitiveness of all regions, the Northeast leads with an overall RCI score of 79.2, followed by Florida at 78.2 and the Midwest at 78.1.
Miami ranks first, with an RCI score of 91.2. While the market has seen a 4.12% increase in housing supply, renters still have limited options as 72% renewed their leases. According to RentCafe, as many as 18 prospective renters are competing for a vacant apartment in the metro, double the national average, with rental units being filled within 33 days. Although the occupancy rate is high at 96.5%, the market is showing signs of slowing compared with 2023.
Miami’s edge is starting to slip as several Midwest markets show their strength and claim nine of the top 30 spots.
Suburban Chicago comes in at the No. 2 spot, with RentCafe attributing this to a Midwest economic resurgence and corporate relocations and expansions reshaping the multifamily market in recent years. With an RCI score of 88, demand is surging with a 94.5% occupancy rate, nearly 70% of renters renewing their leases, and 14 renters competing for each vacant unit. In addition, Chicago comes in at No. 7 with an RCI of 82.5. The city also has a 94.5% occupancy rate, a 59.2% lease renewal rate, and 11 renters competing for each vacant unit.
Other key findings from the RentCafe report:
- Milwaukee, experiencing home buying challenges and a tight housing supply, is the third-hottest market. It boasts an RCI of 85.7, up from 80.3 last year. The newly built apartment stock represents just 2.01% of the total rental supply, down from 2.91% in 2023. Over two-thirds of renters, 70%, have opted to renew their leases, which is slightly more than in 2023. The average vacant unit in the market is filled within 36 days, with 12 renters competing for each one;
- Ranking No. 27, Louisville, Kentucky, is the top-trending market with an RCI of 76.3, up 8.8 points from last year. According to RentCafe, this is largely due to a 5.4% increase in lease renewals and a mismatch between supply and demand;
- Several other markets have been significantly more competitive year over year, including North Carolina’s Piedmont Triad, Silicon Valley, and Las Vegas. The Piedmont Triad’s score has increased by 8.6 points to 73.2 due to a continued demand and a housing shortage. Silicon Valley’s score has grown by 7.5 points to 80.9, driven by the tech sector’s revival, and Las Vegas, fueled by its strong economy, has experienced a 7.1-point boost to 73.2;
- Bridgeport-New Haven, Connecticut, is the most competitive market in the Northeast for 2024, ranking No. 4 in the nation with an RCI of 83.4, up from 76.8 in 2023.The market is seeing strong population growth, fueled by families and younger renters drawn to biotech and education jobs in the area. The demand has strained the limited housing supply, with new apartment construction slowing from 1.9% in 2023 to 1.23% this year. As a result, only 4.5% of units are available;
- Pennsylvania’s Lehigh Valley has emerged as the hottest small rental market for 2024 with an RCI of 90.1, up 6.5 points year over year. Newly opened units only account for 0.14% of rentals in the metro, and 80.7% of renters have decided to stay put. Fayetteville, Arkansas; Little Rock, Arkansas; Providence, Rhode Island; and Lafayette, Louisiana, round out the top five for the hottest small markets, followed by Madison, Wisconsin; Harrisburg, Pennsylvania; Worcester-Springfield, Massachusetts; Youngstown, Ohio; and Florida’s Palm Beach County.
Looking ahead to 2025, RentCafe predicts the rental environment to be slightly less competitive than this year thanks to more supply expected to come online. In addition, it expects a high share of lease renewals again next year with the occupancy rate stabilizing just below the 94% mark.
“This increased supply is expected to ease some of the pressure on the rental market, making it less challenging for renters to find available units,” noted the report. “This is mostly reflected in the occupancy trends for the vacancy rate and the number of renters per vacant unit.”
