Is the cost of rent going to continue climbing like this forever? Can it even sustain this pace?
This matters because rents have been increasing far faster than paychecks, taking a larger chunk out of monthly budgets. For the nation’s roughly 120 million renters, that’s a hard pill to swallow.
We keep hearing stories of rents jumping dramatically — 20%, 30% and even 40% hikes. Millions are falling behind on payments and facing the threat of eviction.
We’re guessing you want to know:
- Will rent keep climbing at this rate?
- Are rents rising everywhere, or are there places where they’re not increasing as much?
- Might rents begin to fall in some markets?
- When, if ever, will this pressure ease?
To find answers, we examined rental rates across the United States’ 384 metropolitan statistical areas — that is, larger and midsize cities and their surrounding suburbs. We wanted to identify where rents are accelerating the most and where they’re moving the slowest.
We also spoke with financial and real estate professionals about their expectations for rents going forward and asked what renters should do now.
Where Are the Most Expensive and Least Expensive Places to Rent?
The priciest rental markets won’t surprise many: Silicon Valley, New York City, San Francisco, San Diego, Los Angeles, Miami and Boston top the list.
Typical rents in those metros range from roughly $2,900 to $3,400 for apartments and houses.
The least expensive rental markets include Wichita, Kansas; McAllen, Texas; Akron, Ohio; Little Rock, Arkansas; Des Moines, Iowa; and Milwaukee.
In those cities, rents are generally between about $1,000 and $1,280.
For this piece we used Zillow’s Observed Rent Index, Zillow’s measure of the typical market-rate rent across 384 U.S. metropolitan areas. Those figures are plotted on our interactive map.
Which Cities Saw the Biggest Rent Jumps — and the Smallest?
The fastest-rising rents show up in several Florida metros: Miami, Orlando, Cape Coral and Deltona (located roughly between Orlando and Daytona). Other hotspots include New York City, San Diego and, somewhat unexpectedly, Knoxville, Tennessee, where demand has surged while available apartments are limited.
Rents in these places climbed by an eye-popping 14% to nearly 19% over the past year.
Markets with the slowest rent growth include Spokane, Washington; Baltimore; Minneapolis; Las Vegas; and Fresno and Stockton in California.
There, rents have only inched up by a relatively modest 1.8% to 4.5% over the same period.
What’s Driving Rent Trends?
On a national level, Zillow reports the typical rent is up about 11% year over year — though individual experiences will vary by location.
Most experts we consulted expect rents to continue outpacing inflation next year. One major reason: elevated mortgage rates are keeping would-be buyers on the sidelines, pushing more households to rent and increasing rental demand.
“I expect rental prices to keep rising over the long term because many prospective homebuyers can’t currently afford to buy,” said Jennifer Spinelli, CEO of Watson Buys, a home-buying firm in Denver, Colorado. “That said, there are indications that rent growth is easing in some cities. It’s a mixed picture.”
That observation aligns with a few recent reports showing nationwide rents actually dipped in September compared to the prior month.
Reports from Realtor.com and the brokerage Redfin both found rent increases were starting to moderate.
So there may be some relief on the horizon.
“U.S. rental rates are cooling in much of the country and are largely stabilizing, with certain smaller markets seeing declines of 5% to 10%. That follows an initial surge and subsequent drop in rental demand,” said Dennis Shirshikov, a strategist at Awning.com, a real estate investment company in California.
“In specific cities such as Miami, NYC and Austin, rents continue to climb because those areas are expanding faster than new housing can be delivered.”
Will Rent Keep Rising Next Year?
Most experts anticipate rents will still trend upward in 2023, which could force renters into tough choices.
“The signals that rent growth is cooling are temporary, and renters should prepare to pay more,” said Tennessee-based financial advisor Bill Ryze.
Searching in less competitive regions is one way to find more affordable options, advises Danny Marshall, a mortgage broker and real estate agent at Mortgage Rate Guru.
“Another strategy is to target properties offering short-term leases,” he said. “Shorter leases can be cheaper than long-term commitments and offer flexibility if your circumstances change.”
In the end, outcomes will vary by location.
“Rental prices will rise, fall, remain steady or fluctuate across the country depending on the specific market,” said Tomas Satas, founder of Windy City HomeBuyer real estate investors in Chicago. “Housing dynamics differ from city to city and even neighborhood to neighborhood.”
Alex Delaney ([email protected]) is a senior writer at Savinly.
