Apartments are seen under construction on February 28, 2023 in Austin, Texas.
Brandon Bell | fake images
The apartment market is finally relaxing. At the same time, competition is intensifying in some key markets.
There is a huge supply of new apartments that will be available this year. And rents have fallen for six straight months, now at their lowest levels since March 2022, according to search site Apartment List.
For a one-bedroom apartment nationwide, the most recent estimated median rent is $1,207; for a two-bedroom it costs $1,359. The national median was down 0.3% in February from January, down 1% year over year and down 4.7% from an all-time high in August 2022, according to Apartment List.
Rents are expected to fall further, with the national multifamily vacancy rate at 6.5% and expected to rise this year as more units come up for rent.
Still, 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 by 2024.
The rankings are based on five factors: the number of days apartments were unoccupied, the occupancy rate, the number of prospective tenants competing for an apartment, the percentage of tenants who renewed their leases, and the share of new apartments recently completed.
In Miami, apartments now rent in 36 days, according to the report, compared to a national average of 41 days. They have 14 prospective tenants for each 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 in 37 days on average and 95.1% occupancy. Chicago and Grand Rapids, Michigan, are also high on the list, as the Midwest becomes more popular with younger renters due to its relative affordability.
The remote work option has also sent more people to the region, but the supply of apartments is decreasing, making it more competitive. The Midwest was the most searched region for rentals in the report.
“Renting in the Midwest is a good option for many aspiring homeowners, including long-time residents and newcomers,” according to the RentCafe report. “That's because this housing arrangement allows them to save for down payments until they can fulfill the American dream of owning a home.”
While rental supply is increasing, demand remains sustained thanks to a shortage of homes for sale in the current market and rising mortgage rates. Home prices remain high, even with rising mortgage interest rates, making it increasingly difficult for younger Americans to make the transition from renters to homeowners.
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