Many rental markets did well in 2020 despite the headwinds of a recession and pandemic. The graph below charts the markets that performed the best in terms of rent growth. They're a surprising list to say the least!
Notes: covers the "metro area" for each market; source of data is Zillow
Memphis: not many would have predicted this being the leader at +8.3%. The market has some moderate growth. However, I suspect a lack of new supply might be the driving force behind this performance.
Tucson: Phoenix's little brother to the south has been rip-roaring over the last couple of years.
Syracuse: definitely would not have called this. Most investors I talk to hate Upstate NY.
Riverside: one of the least affordable markets in the US when comparing rents to incomes. Yet rent keeps growing!
Boise: #1 for appreciation and #9 for rent growth in 2020.
Indianapolis: a very underrated Midwest market with lots of growth and affordability.
Chattanooga: one of three markets in the US to have gained jobs in 2020.
What do you all think about this list? Do you expect repeat performances in 2021? Are you invested in any of these markets?
Rent to price ratios are excellent in Syracuse. If cashflow is your thing there are few cities that are better. However, I agree that it is surprising that it made the list for "rent growth". Especially with the eviction moratorium.
Tucson definitely has all the indicators you look for when it comes to economic growth. That combined with much higher prices in the larger metro to our north, Phoenix, has really driven a lot of people to the city. Unfortunately the high cost of building right now has continued to limit our inventory. Thanks to all of that looks like we ended up on the list for highest appreciation and rent growth. 😊
Definitely surprised that Syracuse made this list. That's great for a few upstate NY investors that I know.
Columbus, Ohio has seen stable growth with strong rents. There hasn’t been any major rent hikes I’ve seen but as properties are renovated rents go up a lot in %. If there was a lot of turnover in Memphis couldn’t that cause the numbers to be skewed?
@Adam Lacey I can tell you we’ve been non-stop with out of town investors. And renters are lining up before you put the rental on the market. But yes of course we are NY, a tenant heavily favored state, but we definitely have good cash flow even with higher taxes.
@Nick Gerli I’d be curious to see how the data compares with other sources like costar or yardi matrix. Do you have access to that data?
@Nick Gerli you have started down the long and tiresome road of looking at macro data...completely pointless in all practical terms and highly misleading. Real estate is reported on a macro level, but it happens on a local level. Focus on the location, not the market.
Interesting points but I agree with some of the above comments that there is a bigger picture to investing in certain markets over others other than the rent increase.