Earlier this year, a report from CBRE showed that there were more apartments built last year than in almost any other year since the 1980s. The report also showed where those apartments are being built, with the majority of the development (80%) coming from the top 20 markets.
But are builders building where renters actually want to live? Do they really have their collective finger on the pulse of the renter? Yes and no, as it turns out.
To find the most popular rental markets, HotPads analyzed search data and ranked the top 50 metro areas based on two factors: the share of rent searches that are local, and how often those markets appeared as a top search destination for renters looking to move from other areas.
Put simply, these markets are the ones that people who live there don’t want to leave, and the ones where people who don’t live there want to move to.
According to the HotPads report, Chicago is the most desirable rental market in the U.S., followed by Los Angeles.
In Chicago, 86% of home and apartment searches on HotPads come from local residents, compared with 83% of searches in Los Angeles, the report shows.
According to the report, both markets are also popular among renters looking to relocate, with Chicago and Los Angeles both ranking among the most-searched-for markets in searches coming from 44 of the country’s other 50 largest metro areas.
Both Chicago and Los Angeles ranked among the top 20 markets where the most apartments were built last year, with Los Angeles checking in at No. 3, while Chicago was No 10.
As for the top 10 most popular rental markets among renters, here’s the full list from HotPads:
- Los Angeles
- San Diego
According to HotPads, the top 10 most sought-after markets all have “historically strong job markets, and many are affordable – renters can expect to spend around the recommended 30% of their income or less on rent in seven of the most sought-after rental markets.”
But HotPads notes that rental affordability is becoming a concern in many of those markets, with rents rising faster now than they were last year in seven of the top 10 markets.
“As the rental market picks up speed, it makes sense that renters would be drawn to areas with strong job markets and relatively affordable housing costs,” said Joshua Clark, economist at HotPads.
“However, there are drawbacks to being popular. More new residents typically increase demand for housing, which in turn can make the market more competitive,” Clark added. “While it often takes time for rent shoppers to take the plunge and move, those looking to relocate can benefit from making a decision sooner rather than later – if these areas don’t keep up with increased demand, rent prices could rise even faster.”
Of the top 10 most popular markets for renters, only two did not rank in the top 20 markets where builders built the most apartments last year: Philadelphia and San Diego.