Apartments are seen under construction on February 28, 2023 in Austin, Texas
Brandon Bell | Getty Images
The apartment market is finally starting to relax. At the same time, competition is intensifying in some key markets.
There are a huge number of new apartments coming online this year. Rents have fallen for six straight months, and are now at their lowest levels since March 2022, according to Apartment List.
For a one-bedroom apartment nationally, the recent median rent is $1,207; For two bedrooms it is $1,359. The nationwide average fell 0.3% in February compared to January, down 1% year over year and down 4.7% from its all-time high in August 2022, according to Apartment List.
Rents are expected to decline further, with the nationwide multifamily vacancy rate at 6.5%, and expected to rise this year as the number of units for rent rises.
However, all real estate is relative, and some apartment markets are hotter than others. A new report from RentCafe, another apartment search site, ranks the most competitive rental markets, with Miami topping the list for 2024.
The ranking is based on five factors: the number of days apartments have been vacant, the occupancy rate, the number of potential renters competing for an apartment, the percentage of renters who have renewed their leases, and the share of new apartments recently completed.
In Miami, apartments are now renting within 36 days, according to the report, compared to the national average of 41 days. They have 14 potential tenants per unit compared to the national average of seven, and the city's occupancy rate is 96.5%, compared to 93% nationally.
Milwaukee comes in second, with apartments renting within 37 days on average, and an occupancy rate of 95.1%. Chicago and Grand Rapids, Michigan also rank high on the list, with the Midwest becoming more popular among younger renters due to relative affordability.
The option of remote work has also sent more people to the area, but the supply of apartments there is dwindling, making it more competitive. The Midwest was the most popular region for renting in the report.
“Renting in the Midwest is a good option for many aspiring homeowners, including long-time residents and newcomers,” RentCafe reports. “That's because these housing arrangements allow them to save for down payments so they can achieve the American dream of owning a home.”
While the supply of rentals is on the rise, demand continues thanks to the short supply of homes for sale on today's market and high mortgage rates. Home prices remain high, even as mortgage interest rates rise, making it increasingly difficult for younger Americans to make the transition from renter to homeowner.
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