With rising rents across the country, places that offer relative affordability are in high demand, leading to increased competition and a potential for prices to go up.[0] Realtor.com® Chief Economist Danielle Hale noted that there are fewer rental homes and apartments available in many of these metros, leading to higher prices.[0] Cities like Indianapolis, Birmingham, Columbus, Kansas City, Cleveland, and Rochester have seen the fastest year-over-year price increases in January 2023, leaving few metros that are maintaining their current level of affordability.[1]
Nationwide, rent growth for studio to two-bedroom properties continued to slow, with the median rent down 2.9% year-over-year, the lowest growth rate in 22 months.[2] Rent in January 2022 was 16.2% higher than it was in January 2021.[2]
Two-bedroom units saw the most significant drop in rent growth. Nationally, the median rent for two bedrooms was $1,934, an increase of $47 (2.5%) compared to the same time last year.[3] However, rent growth has been fastest in some of the least expensive rental markets, such as Indianapolis, Birmingham, and Columbus, all of which had a single-digit growth rate for the seventh month in a row.
The figure below displays the year-over-year rent[2]
The graph depicted in Figure 2 displays the national rent trend by unit size
Overall, rent growth is slowing down in most places, but the cheapest rental markets are still seeing a significant increase in prices. This could be due to the decreased rental vacancy rate in many of these areas, which is near its long-term low.[1] 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.[1] Rents in places like Indianapolis, Birmingham, and Columbus have experienced the fastest year-over-year growth, raising further affordability concerns.
0. “Realtor.com® January Rental Report: Only One Major Market Remains Below $1,000 Threshold” Yahoo! Voices, 24 Feb. 2023, https://www.yahoo.com/now/realtor-com-january-rental-report-110000395.html
1. “Gallery: Top 10 least expensive American metro areas” American City & County, 24 Feb. 2023, https://www.americancityandcounty.com/2023/02/24/gallery-top-10-least-expensive-american-metro-areas/
2. “Renters: 50 Largest Metro Areas Compared” MyChesCo, 27 Feb. 2023, https://www.mychesco.com/a/news/national/renters-50-largest-metro-areas-compared/
3. “January 2023 Rental Report: Least Expensive Metros See Faster Rent Growth” Realtor.com News, 24 Feb. 2023, https://www.realtor.com/research/january-2023-rent/