Markets Where Apartment Renters Pay Discounted Rates

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Renters in at least 21 of the measured 100 metropolitan areas are enjoying discounted rates

A new report about the nation’s rental markets shows a dichotomy between those where apartments now rent at a discount relative to their long-term trends and others where housing is so tight that renters are paying steep premiums.

Renters in at least 21 of the measured 100 metropolitan areas are enjoying discounted rates. Boise City, ID offers the best break, with the typical unit renting at a 5.45% discount. Other cities in this category are Austin (3.27% discount), Phoenix (3.15%), Las Vegas (2.88%), and Spokane (2.62%). According to the report, these cities experienced rapid population growth and multifamily developers responded by overbuilding.

As a result, “it’s likely that renting is the better option than buying in these areas,” said Ken H. Johnson, an economist at Florida Atlantic University and one of three individuals for whom the Waller, Weeks and Johnson Rental Index on which the analysis is based was named. The others are Shelton Weeks of Florida Gulf Coast University and Bennie Waller of the University of Alabama.

On the other hand, space is tight in Springfield, MA, where units rent at a 7.45% premium. It’s a similar story in Knoxville (7.18% premium), Madison (6.90%), New Haven (6.84%), and Syracuse, NY (6.71%). “Enough has not been done by local developers and city governments to catch up. These cities are still in the grips of a rental crisis and facing escalating rents above normal,” said Waller.

South Florida, which the report calls “the epicenter of the nation’s affordability crisis” presents a paradox, with a holdover premium from past years that offsets a new discount. The typical rent in Miami fell by .09% in February, compared to a 2.4% increase over the past year for a similar unit, with the result that renters are still paying a premium of 5.4%. “The average rent for the typical unit currently is $2,715 when statistical projections suggest rent should be $2,576,” the report noted.

“It’s still largely unaffordable for many in the region as the typical household needs a six-figure salary to avoid being ‘house poor.’ This situation continues to cause significant strain for large segments of the region’s workforce,” Weeks commented. 

Source: GlobeSt.