January 2023 Rental Report: Least Expensive Metros See Faster Rent Growth

Highlights

  • January 2023 marks the twelfth month of slowing rent growth, and sixth month in a row with a single-digit rate of increase for 0-2 bedroom properties (2.9% Y/Y).
  • The median asking rent in the 50 largest metros declined to $1,726, down by $7 from last month and $80 from peak. 
  • Rent growth keeps cooling for all unit sizes. Rent by size: Studio: $1,417, up 3.9% ($54) year-over-year; 1-bed: $1,609, up 2.8% ($44) year-over-year; 2-bed: $1,934, up 2.5% ($47) year-over-year.
  • Faster rent growth was seen in some of the least expensive rental markets such as Indianapolis, IN (10.5%), Birmingham, AL (8.8%), Columbus, OH (8.3%), raising affordability concerns.

In January 2023, the U.S. rental market experienced single-digit growth for the sixth month in a row after twelve months of slowing from January’s peak 16.2% growth. Median rent across the top 50 metros was up just 2.9% year-over-year for 0-2 bedroom properties, the lowest growth rate in 22 months. The median asking rent was $1,726, down by $7 from last month and $80 from the peak but is still $295 (20.6%) higher than the same time in 2020 (pre-pandemic). 

Figure 1: Year-over-Year Rent Trend

Rent Growth Shows Slower Cooling Off for All Unit Sizes

In January 2023, two-bedroom units saw a single-digit growth rate for the seventh month in a row. The median rent continues to drop, down by $3 from last month and $122 from the peak. The median rent for two bedrooms was $1,934 nationally, $47 (2.5%) higher than the same time last year. Even though rent growth for larger units has slowed the most relative to last year, larger units had the biggest premium over the past three years, up by $340 (21.3%) compared to three years ago before the pandemic. 

Rent growth for one-bedroom units also kept cooling. The median rent for 1-bedroom units was $1,609, down by $11 compared to last month and $70 less from the peak. However, it is still up by $44 (2.8%) compared to the previous year and $262 (19.5%) higher since January 2020.

In January, rent growth in studios slided to 3.9%. As renters have been seeking affordability, studio rents appreciated faster  than larger units. The median rent for studio units was $1,417, down by $15 compared to last month and $56 less from the peak. Nevertheless, studio rents were up by $54 (3.9%) year-over-year and $188 (15.3%) higher than three years ago–a significant jump that is only slightly smaller than that seen in larger units. 

Table 1:  National Rents by Unit Size

Unit Size Median Rent Rent YOY Rent Change-3 years
Overall $1,726 2.9% 20.6%
Studio $1,417 3.9% 15.3%
1-bed $1,609 2.8% 19.5%
2-bed $1,934 2.5% 21.3%

Figure 2: National Rent Trend by Unit Size

Markets with Rents Under $1300 are Clustered in Midwest

Table 2 shows the 10 metros that had the cheapest 0-2 bedroom for-rent properties in January 2023. Specifically, half of these least expensive markets are located in the affordable Midwest, four are in the South, and one is in the Northeast while none are in the West. 

Table 2: Metros with the Least Expensive 0-2 Bedroom Rental Homes

Rank  Metro Median Rent YOY Growth Rental Vacancy Rate Homeownership Rate
1 Oklahoma City, OK $982 5.2% 12.5% 65.2%
2 Louisville/Jefferson County, KY-IN $1,167 1.8% 5.9% 70.4%
3 Birmingham-Hoover, AL $1,178 8.8% 13.2% 71.0%
4 Rochester, NY $1,235 6.2% 3.7% 74.8%
5 Columbus, OH $1,242 8.3% 4.2% 58.6%
6 Indianapolis-Carmel-Anderson, IN  $1,266 10.5% 9.8% 71.6%
7 Memphis, TN-MS-AR $1,274 -0.1% 6.7% 61.3%
8 St. Louis, MO-IL $1,279 4.7% 8.2% 71.9%
9 Cleveland-Elyria, OH $1,290 7.1% 3.1% 61.8%
10 Kansas City, MO-KS $1,298 8.2% 8.9% 66.4%

On the demand side, relatively affordable for-sale markets in these metros make homeownership a viable option for a broader set of residents, creating an outlet for renters under pressure. In fact, the Realtor.com December 2022 Rental Report showed that in Birmingham, Memphis, and St. Louis the monthly costs of buying a starter home was more affordable than rent.

Not only are the costs tipped in favor of ownership, data suggest that many households in these affordable markets choose to buy when considering living arrangements. Six of these metros have higher than national average homeownership rates (65.9% nationwide). And although sales data and sentiment data suggest that homebuyer interest remains low nationwide, Rochester, NY and Columbus, OH top our January Hottest Markets Report, underscoring how in-demand these affordable areas remain.

On the supply side, seven of these metros have a higher rental vacancy rate (5.8% nationwide), suggesting more abundant options for renters, which helps keep rental prices comparatively low. 

Least Expensive Metros See Faster Rent Growth

However, cheaper rents do not indicate slower rent growth. When compared with historical data, vacancy rates in many of these areas are near their long-term lows, implying a lower than usual rental supply in these metros. For example, in the fourth quarter of 2022, the average rental vacancy rate across these ten least expensive markets was 7.6% — a significant drop from the 9.7% vacancy rate five years ago. As a result, we see Indianapolis, IN (10.5%), Birmingham, AL (8.8%), Columbus, OH (8.3%), Kansas City, MO-KS (8.2%), Cleveland, OH (7.1%) and Rochester, NY (6.2%) among the top 10 metros that experienced the fastest year-over-year growth in January 2023, raising further affordability concerns. 

Appendix: Rental Data – 50 Largest Metropolitan Areas – January 2023

Metro Overall Median Rent Overall Rent YY Rental Vacancy Rate Homeownership Rate
Atlanta-Sandy Springs-Roswell, GA $1,835 -0.9% 5.4% 59.9%
Austin-Round Rock, TX $1,666 -1.4% 4.9% 64.6%
Baltimore-Columbia-Towson, MD $1,733 0.4% 6.9% 72.1%
Birmingham-Hoover, AL $1,178 8.8% 13.2% 71.0%
Boston-Cambridge-Newton, MA-NH $2,850 4.6% 3.1% 60.7%
Buffalo-Cheektowaga-Niagara Falls, NY NA NA 3.8% 66.8%
Charlotte-Concord-Gastonia, NC-SC $1,644 3.1% 3.4% 60.3%
Chicago-Naperville-Elgin, IL-IN-WI $1,965 4.8% 5.8% 68.9%
Cincinnati, OH-KY-IN $1,312 5.7% 7.9% 65.2%
Cleveland-Elyria, OH $1,290 7.1% 3.1% 61.8%
Columbus, OH $1,242 8.3% 4.2% 58.6%
Dallas-Fort Worth-Arlington, TX $1,610 2.6% 6.7% 56.9%
Denver-Aurora-Lakewood, CO $1,874 1.2% 4.8% 67.7%
Detroit-Warren-Dearborn, MI $1,329 3.0% 4.4% 71.0%
Hartford-West Hartford-East Hartford, CT NA NA 4.4% 67.9%
Houston-The Woodlands-Sugar Land, TX $1,453 2.3% 10.5% 66.7%
Indianapolis-Carmel-Anderson, IN $1,266 10.5% 9.8% 71.6%
Jacksonville, FL NA NA 7.4% 63.5%
Kansas City, MO-KS $1,298 8.2% 8.9% 66.4%
Las Vegas-Henderson-Paradise, NV $1,509 -6.2% 6.1% 60.2%
Los Angeles-Long Beach-Anaheim, CA $2,632 4.0% 3.3% 50.2%
Louisville/Jefferson County, KY-IN $1,167 1.8% 5.9% 70.4%
Memphis, TN-MS-AR $1,274 -0.1% 6.7% 61.3%
Miami-Fort Lauderdale-West Palm Beach, FL $2,559 4.8% 6.0% 57.1%
Milwaukee-Waukesha-West Allis, WI $1,415 8.6% 7.2% 50.5%
Minneapolis-St. Paul-Bloomington, MN-WI $1,452 3.3% 6.8% 75.8%
Nashville-Davidson–Murfreesboro–Franklin, TN $1,672 0.7% 5.5% 67.6%
New Orleans-Metairie, LA $1,671 -3.8% 8.2% 67.9%
New York-Newark-Jersey City, NY-NJ-PA $2,730 9.4% 3.1% 50.1%
Oklahoma City, OK $982 5.2% 12.5% 65.2%
Orlando-Kissimmee-Sanford, FL $1,932 3.8% 6.4% 59.3%
Philadelphia-Camden-Wilmington, PA-NJ-DE-MD $1,803 5.4% 5.3% 69.9%
Phoenix-Mesa-Scottsdale, AZ $1,593 -3.4% 7.0% 67.2%
Pittsburgh, PA $1,346 5.3% 5.5% 72.6%
Portland-Vancouver-Hillsboro, OR-WA $1,685 6.1% 4.8% 65.9%
Providence-Warwick, RI-MA NA NA 3.8% 64.8%
Raleigh, NC $1,582 2.6% 6.0% 62.3%
Richmond, VA $1,446 3.1% 5.7% 68.5%
Riverside-San Bernardino-Ontario, CA $2,114 2.1% 2.9% 63.9%
Rochester, NY $1,235 6.2% 3.7% 74.8%
Sacramento–Roseville–Arden-Arcade, CA $1,829 -3.6% 2.5% 61.5%
San Antonio-New Braunfels, TX $1,377 2.2% 7.2% 60.6%
San Diego-Carlsbad, CA $2,666 2.9% 3.2% 54.1%
San Francisco-Oakland-Hayward, CA $2,809 0.7% 5.5% 59.1%
San Jose-Sunnyvale-Santa Clara, CA $3,005 2.9% 5.6% 54.8%
Seattle-Tacoma-Bellevue, WA $2,008 0.8% 4.7% 66.3%
St. Louis, MO-IL $1,279 4.7% 8.2% 71.9%
Tampa-St. Petersburg-Clearwater, FL $1,873 2.0% 7.5% 63.1%
Virginia Beach-Norfolk-Newport News, VA-NC $1,497 5.2% 8.3% 61.2%
Washington-Arlington-Alexandria,DC-VA-MD-WV $2,103 3.3% 5.2% 64.4%

Methodology 

Rental data as of January for studio, 1-bedroom, or 2-bedroom units advertised as for-rent on Realtor.com®. Rental units include apartments as well as private rentals (condos, townhomes, single-family homes). We use rental sources that reliably report data each month within the top 50 largest metropolitan areas. Realtor.com® began publishing regular monthly rental trends reports in October 2020 with data history stretching back to March 2019.

With the release of its January rent report, Realtor.com® incorporated a new and improved methodology for capturing and reporting more comprehensive rental listing trends and metrics. The new methodology is expected to yield a cleaner, more representative and more consistent measurement of rental listings and trends at both the national and local level. The methodology has been adjusted to better represent the true cost of primary housing for renters. Most areas across the country will see minor changes with a smaller handful of areas seeing larger updates. As a result of these changes, the rental data released since January 2023 will not be directly comparable with previous releases and Realtor.com® economics blog posts. However, future data releases, including historical data, will consistently apply the new methodology.

  

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