Have We Seen the End of Crazy Rent Growth?
After meaningful increases in rent in April vs. March, Dwellsy saw numbers flatten out in May with zero rent growth in single-family homes (SFR) and an increase of just $6 for apartments.
Once again, this plays into a storyline of moderation in the rental market, and perhaps last month’s outsized growth was just a short-term blip.
Interestingly, the year-over-year data is tracking against the end of a period of rapid rent growth for SFR properties in 2022 — May 2022 marked a point when rent growth slowed materially for these residences. As a result, we’ve seen annual rent increases in SFR slow from 12.9% in May of 2022 to just 4.5% now, trailing just below inflation.
Here’s the headline rent price data through May 2023:
$1,875/mo: 3 Bedroom SFR median asking rent
- Up $80 or 4.5% vs. $1,795 in May 2022
- Flat ($0/0% change) vs. $1,875 in April 2023
$1,295/mo: 1 Bedroom Apartment median asking rent
- Down $15 or 1.1% vs. $1,310 in May 2022
- Up $6 or 0.5% vs. $1,289 in April 2023
For more on Dwellsy’s rent reporting methodology, please check out our article on the topic.
Median Asking Rent, May 2022 to May 2023
A look at the data over the past two years puts the most recent May rent changes in context. While we have seen an overall significant move up in 3-bedroom single-family home rental prices since January of 2021 (a 23.6% increase), rent for 1-bedroom apartments has actually declined by 1.5% during this time.
Why the Difference In Rent Change Between SFR and Apartments?
The past several years have brought enormous changes in consumer preferences for housing.
The biggest change has been a shift to value larger homes as more of us work from home, spend more time at home, and embrace pets. In many cases, this has caused renters to be willing to spend more to get the extra space — perhaps with savings from no longer having to commute.
Additionally, many individuals and families, freed from the need to live close to their work, have moved to lower-cost locations and have been able to trade up to larger homes for the same or less money. For example, about $2,060 will get you a three-bedroom home in Nashville, TN but you’ll need $2,095 to get a 1-bedroom apartment in Los Angeles, CA.
This has meant that overall demand for smaller rentals, in particular, those at average/median price points, has lagged that for larger homes and single-family properties.
At the same time, we’ve seen record growth in deliveries of new apartment supply, increasing the availability of rentals at a time when demand is not particularly high.
That said, we do see a divergence in the numbers between premium and more typical, middle-class apartments. Premium apartments have continued to see higher rent growth and certain cities that have dense apartment stock (we see you, NYC) have also continued to see material increases in rent.
Most Expensive Large Cities for 3-Bedroom Single-Family Home Rents
California once again cities topped the charts for the most expensive single-family home rental markets in the country, with Los Angeles, San Jose, San Francisco, and San Diego taking the top four spots with asking rent at $4,099, $3,850, $3,736 and $3,600 respectively. The Riverside-San Bernadino-Ontario MSA is also on the list (9th), so California cities claim fully half of the most expensive rental cities in the country for single-family home rentals.
Most Expensive Large Cities for 1 Bedroom Apartment Rentals
Across the country, rents for 1 bedroom apartments have been relatively flat, but renters in many large cities did see meaningful increases this past year.
Taking the overall “trophy” is New York City, which saw the highest overall rent level for these types of apartments ($3,241/mo), and a substantial increase versus the prior year (+ 9.9%).
Boston, MA, San Francisco, CA, San Jose, CA, and Los Angeles, CA round out the top five.
It’s interesting to note that there are more markets on this list with falling year-over-year rents (6 of 10) than those with increasing rents.
Most Expensive Small Cities for 3 Bedroom Single-Family Home Rents
Over the course of the past year, many renters found their way to smaller cities with great amenities or attractions (California/Florida sunshine!), and those on this list saw the highest rent as a result.
This month, Salinas, CA (home to tony Carmel-By-The-Sea) dropped to second place with median rent at $3,495/mo, beat out by Naples-Marco Island, FL at $3,700/mo.
The Santa Barbara, CA metro region saw the highest overall growth in rent in this group, with rent up more than 14.3% in the past year, though their rent growth numbers are lower than we’ve seen in a while, suggesting the Santa Barbara market is stable/cooling while absorbing past rent increases.
Most Expensive Small Cities for 1 Bedroom Apartment Rentals
Smaller cities are often some of the most challenging places to find great apartment rentals and the top 10 on this list are no exception. We’re not at NYC levels on the rent here, but rent for a 1 bedroom in each of these markets exceeds $1,700 per month and goes as high as $2,173/mo in Santa Barbara, CA — if you can find one.
Cities With The Fastest Growing 3-Bedroom Home Rent in 2023
Nationwide, single-family rentals have grown in price at a dramatically higher rate than apartments, and in these 10 markets, that price increase is felt most dramatically.
This month, Albany, GA shows as the city with the most dramatic increase in median rent for available units with an overall increase of nearly 25% in monthly rent. Lawton, OK, and Fort Smith, AR-OK round out the top three with year-over-year rent increases of nearly 21% and 18% respectively.
Cities With The Fastest Growing 1-Bedroom Apartment Rent in 2023
The residents of Oshkosh, WI have probably never been happier to lose their first place ranking than they are with this list. For months, they’ve led the list with the highest rent increase in the country for 1 bedroom apartments, but largely because it seems like their apartment market has flattened out, they’ve fallen into second place, though they’re still reckoning with 50% year over year rent growth.
This month’s new number 1 is Las Cruces, which has slightly lower rent levels, but a slightly higher rent growth: 51%.
Zanesville, OH, Charleston, WV, and Corpus Christi, TX round out the top five, each increasing rents for 1 bedroom apartments by 30% or more in the past year.
Apartment markets in smaller cities, like those in this list, can be highly volatile, influenced by the delivery of just a few new buildings in a particular market, so please keep that in mind with this particular cohort.
How Does Rent Compare in Different Regions of the Country?
At the request of a reporter, we recently took a look at how the rent compares across different U.S. regions and we were quite surprised to see the results.
For 3-bedroom house rentals, the Western states like California, Washington and Oregon are dramatically more expensive than other parts of the country. The Southwest and Southeast are hand in hand for second place and the Midwest comes in with the lowest costs.
Interestingly, median asking rent for these homes in the Western states are nearly a full $1,000 more expensive than those in the Midwest — Ouch.
With 1 bedroom apartments, Western states like California, Oregon, and Washington are the most expensive, closely followed by the Northeast. Apartments in the Southwest and the Midwest are dramatically different — far less expensive.
It’s notable that the West is not all by itself at the top of the expense pile here.
We also looked at how rent is changing in each region in comparison to the others, with dramatic results again.
For 1-bedroom apartments, the only region with increasing rent over the past year is the Southwest (e.g. TX, AZ, NM). In contrast, only the Northeast is seeing rent increases for 3-bedroom apartments. And, in both cases, the results are flipped: the Northeast has seen the most rent declines over the past year for 1-bedroom apartments and the Southwest has seen the biggest rent declines for 3-bedroom homes.
Average Rent vs. Median Rent
While average rent is the more widely used term, here at Dwellsy, we use the median of the data set for each property type because of the fact that rent prices can be priced up to $20,000 and beyond, but cannot go below $0.
This asymmetrical data creates a situation in which the average and the median are substantially different and the average is always higher than the median.
Dwellsy believes the median is the most representative for this analysis since it more accurately represents what renters are actually seeing and paying when it comes to rentals.
For more on our methodology and approach, please visit our detailed methodology description.
