February Rents Increased the Most in America’s Small Markets

by | BiggerPockets.com

RentCafe just released its monthly rent report with data from rents charged last month in the 250 largest U.S. cities. The report is based on information collected by Yardi Matrix, which analyzed rents charged in market-rated apartment communities of at least 50 units in over 120 markets across the country.

These are the top findings:

  • The national average rent was $1,364 in February 2018 — 2.7 percent higher than this time last year, and up .01 percent ($1) month over month.
  • 87 percent of the nation’s biggest 250 cities have seen rents grow in February year over year; in 11 percent of cities, rents remained unchanged; only 2 percent experienced rent drops compared to 2017.
  • 19 of the 20 fastest-growing rents are in small cities.
  • Among the largest U.S. cities, Las Vegas, Denver, and Detroit had the fastest rising rent prices in February; New York City, El Paso, Texas, and Austin, Texas, had the slowest rising rent prices.
  • Studio apartment rents are the slowest growing by apartment size nationwide, at 2 percent year-over-year (stagnant for the month) compared with a 3.2 percent increase in rents year-over-year (.2 percent for the month) for 1-, 2-, and 3-bedroom apartments.
  • New to the highest-increase list are Colorado cities Fort Collins and neighboring Greeley, with year-over-year increases hovering around 9 percent. Yonkers, New York, and Salinas, California also saw similar hikes.

Related: The 20 U.S. Zip Codes Most Affected By Gentrification Since 2000

The report defines large cities as cities with populations of at least 600,000 people. Mid-sized cities are defined as those with populations between 300,000 and 600,000 people. Meanwhile, small cities are those with populations of less than 300,000 people.

Large City Findings

  • Las Vegas experienced the fastest increasing rents year-over-year with a 6.6 percent increase;
  • Followed by Denver, which increased 5.8 percent;
  • and Detroit, with 5.7 percent.
  • Brooklyn and Manhattan experienced the most significant decreases, .7 percent and .2 percent, respectively.

Rental prices have been skyrocketing in Los Vegas for more than a year now, as costly home price tags boost the demand for rentals.

Meanwhile, the slowest large-city rental markets last month were Lubbock, Texas (year-over-year rents decreased by -4.8 percent), Norman, Oklahoma (where rents decreased -2.7 percent) and Baton Rouge, Louisiana (where rents were down -2.1%).

In a win for millennials and other City renters, rent prices in Brooklyn and Manhattan actually went down year-over-year (-.7 percent and -.2 percent, respectively).

Mid-Size City Findings

Says RentCafe: “Mid-size cities see mid-sized increases compared to other markets.” The biggest year-over-year rent increases last month came from Sacramento, California; Colorado Springs, Colorado; Stockton, California; Mesa, Arizona; and Arlington, Texas.

  • Rent prices in Sacramento are rising faster than in any other similar-sized city, reaching $1,292/month in February, which is up by 7.9 percent year-over-year (almost $100 more/month than one year ago).
  • Colorado Springs rentals cost 6.5 percent more than they did in February of last year, with the average price of an apartment costing $1,071/month.
  • New Orleans is the only mid-size city where average rent actually went down (-.7 percent); it’s currently at $1,092/month.

Related: 2018 Best Commercial Real Estate Markets to Invest In: Part I

Small City Data

  • Small cities claimed 19 of the top-20 largest rent increases last month.
  • Lancaster, California rental prices have shot up 11.1 percent since February of last year.
  • Reno, Nevada saw the third-largest increase in the U.S., with a 10.3 percent jump—increasing by more than $100/month since last February.
  • In Fort Collins, Colorado, prices increased by nearly 10 percent year-over-year, closing in on $1,500/month.
  • Salinas, California; Yonkers, New York; Greeley, Colorado; and North Las Vegas all reported rent increases above 8 percent.

According to RentCafe, Colorado, Arizona, and Nevada are among the hottest markets to watch.

Colorado recurs in the top 5 fastest-rising rents in every market size category. In total, seven Colorado cities saw rents increase by more than 5 percent over the year: Fort Collins (9.9 percent), Greeley (9 percent), Arvada (7.6 percent), Colorado Springs (6.5 percent), Boulder (6.3 percent), Denver (5.8 percent), and Aurora (5.2 percent). Nevada‘s rejuvenated housing markets Las Vegas (6.6 percent), North Las Vegas (8.7 percent), and Reno (10.3 percent) have also been very visible on the national rental scene lately with some of the fastest-rising rental prices in the U.S. Increasingly popular Arizona has five cities where rent prices increased by more than 5 percent in the last year: Peoria (6.9 percent), Gilbert (6.8 percent), Mesa (5.7 percent), Phoenix (5.4 percent),  and Chandler (5.3 percent).

Do you have rental properties in these markets?

Does this date reflect your experience? Share below!

About Author

Lindsay Tucker

Lindsay Tucker is a writer, editor, and real estate junkie in Denver, Colorado. Check out more of her work at lindsaytucker.com.

2 Comments

  1. Andrew Oatman

    Thanks for the article. Data analysis like this for real estate investing is great to see!
    One note – I may be missing something, but the data here appears to suggest that Norman, Oklahoma is a “Large City” while St. Louis, Sacramento, Cleveland, etc. are “Mid-Size”. I don’t believe that’s accurate.

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