Rust Belt markets and tertiary markets in the South were among the top markets for rent growth year-over-year in the residential rental space, while previously high-flying markets have dropped on Markerr RealRent’s Q1 trends report, which evaluates multifamily and single-family rental trends.
Allentown, Pennsylvania, had the highest year-over-year rent growth at 3.8%, followed by Columbia, South Carolina, and Lexington, Kentucky, at 3.7% each and Harrisburg, Pennsylvania, at 3%. Austin was at the bottom of the list with rents in negative territory at -5.8%, followed by Pensacola, Florida, at -5.3%, Cape Coral, Florida, at -4.4%, Denver at -4.2% and nearby Colorado Springs at -4%.
Markerr projects that the top markets for multifamily rent growth over the next five years will be heavily concentrated in the Rust Belt and Northeast markets, while the same regions that have struggled over the past year with rent growth will continue on that trajectory. The study predicts Rochester and Syracuse, New York, will lead rent growth, at 5.3% and 5%, respectively. Three Pennsylvania markets – Youngstown, Scranton and Allentown – are expected to follow with rent growth of 4.9%, 4.9% and 4.8%.
Meanwhile, rent is expected to grow the least in Denver and Phoenix, at 1.8% each, followed by Sarasota and Colorado Springs at 2%, and Tampa and San Diego at 2.1%.
The Northeast and Rust Belt markets are also performing well in single-family rent growth. Both Cleveland and Toledo, Ohio, were in the top 10 for SFR rent growth despite not performing as well on the multifamily side. Other leaders in SFR rent growth are Youngstown, Pennsylvania; Syracuse, New York; Lexington, Kentucky; Chicago; and Providence, Rhode Island.
Lower SFR rent growth was primarily found in Florida and Texas, where home prices are also decreasing and affordability is being pressured by condo and HOA assessments and dramatic increases in insurance premiums. The bottom five markets in terms of SFR rent growth were Cape Coral, Austin, Sarasota, San Antonio, and Lakeland, Florida.
Huntsville, Alabama and Wichita, Kansas, topped the list of most affordable markets based on the rent-to-income ratio. The firm noted several markets in Utah, including Ogden and Provo-Orem, as well as Raleigh, North Carolina, were very affordable due to median household incomes exceeding $100,000.
The least affordable markets included many of the usual suspects, said Markerr. Miami, New York and Los Angeles were the least affordable markets in Markerr’s study. They were followed by Boston, San Diego and Chicago.
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