Residential apartment buildings in the Brooklyn borough of New York, US, on Wednesday, July 17, 2024.
Yuki Iwamura | Bloomberg | Getty Images
New apartment construction hit a record high last year, but all that new supply is apparently not enough to cool the competition in the market. Getting a rental is actually becoming even more difficult, according to a new report from RentCafe, an apartment search site.
Last year, developers completed close to 600,000 multifamily units, according to the U.S. Census. That is the highest level since 1974 and a 34% increase from 2023. New York City, Dallas and Austin, Texas, led in the number of new rentals.
Despite that, on a national level, rental competitiveness rose at the start of this year, according to RentCafe’s Rental Competitiveness Index. That’s in large part because a growing number of renters are not moving.
Lease renewal rates rose to 63.1% in the early part of this year, compared with 61.5% in the early part of last year, according to RentCafe. Much of that is likely due to higher mortgage rates and higher prices in the for-sale housing market.
Apartment occupancy is also holding firm at 93.3%, slightly higher than at the beginning of last year. In addition, landlords are offering longer lease periods, which then lead to extended renewal periods, according to the report. As a result, each available apartment has an average of seven applicants.
Looking locally, Miami has the highest occupancy rate. It is the most competitive, with an average 14 applicants for each unit.
Throughout the last few years, Miami has established itself as ‘Wall Street South,’ attracting major banking institutions and investment firms, while existing industries like tech and healthcare continue to grow, bringing in more workers,” wrote Veronica Grecu, senior creative writer and researcher for RentCafe, in the report. “Plus, Miami’s lack of income tax and its location at the crossroads of the Americas remain major draws for professionals and businesses.”
The Midwest, however, leads in overall rental competitiveness. Ten of the top 20 hottest rental markets are in the region, with suburban Chicago coming in second behind Miami. Others include Detroit, Lansing and Grand Rapids in Michigan, as well as Cincinnati, Ohio; Milwaukee, Wisconsin; and Minneapolis–Saint Paul, Minnesota.
Rents, which had been easing, are now on the rise again. Nationwide, rents increased 0.3% in February, the first monthly increase in rents following six consecutive months of declines, according to ApartmentList. February is the start of the historically busy season in the rental market, and rents are expected to rise throughout the summer. Rents are still 0.4% lower than they were in February of last year, however.
Following a period of record-setting rent growth in 2021 and the first half of 2022, the national median rent has now fallen below its August 2022 peak by a total of 4.6%, or $67 per month, according to ApartmentList. The typical rent price, however, is still 20% higher than it was in January 2021.
“Year-over-year rent growth has now been negative since June 2023, but in recent months, there are signs that a return to positive growth is on the horizon,” according to the ApartmentList report’s authors.
