Study: Here are the Best and Worst Markets for Renters

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Renters hoping to catch a break might be able to find deals in the western parts of the United States as the rental crisis starts to ease across the country, according to researchers at FAU and two other schools.

By amber bonefont | 3/6/2024

Renters hoping to catch a break might be able to find deals in the western parts of the United States as the rental crisis starts to ease across the country, according to researchers at Florida Atlantic University and two other schools.

At least 21 of the 100 measured metropolitan areas are renting at a discount relative to their long term rental pricing trend, January data from the Waller, Weeks and Johnson Rental Index shows.

Boise City, Idaho offers prospective renters the largest discount in the country: the typical unit is renting at a 5.45 percent discount. It’s followed by Austin, Texas, a 3.27 percent discount; Phoenix, a 3.15 percent discount; Las Vegas, a 2.88 percent discount; and Spokane, Washington, a 2.62 percent discount.

“These were some of the hottest cities in the country seeing rapid population growth over the past few years. Developers responded to that demand by building more, and they have slowly overdeveloped the number of multifamily units in the area,” said Ken H. Johnson, Ph.D., real estate economist in Florida Atlantic University’s College of Business. “Due to rents trading at a discount, it’s likely that renting is the better option than buying in these areas.”

The Waller, Weeks and Johnson Rental Index, part of FAU’s Real Estate Initiative, measures where the average rent is in the 100 most populated metropolitan areas in the United States and compares it to where rents should be based on historical, statistically estimated rental pricing trends. Johnson, along with fellow researchers, Shelton Weeks, Ph.D., of Florida Gulf Coast University, and Bennie Waller, Ph.D., of the University of Alabama, also measures average yearly increases, monthly increases, and how much annual income the typical household needs to make to avoid paying more than 30 percent of their income toward rent.

Some areas in the county are still in the grip of the rental crisis as renters are paying steep premiums. The top five are Springfield, Massachusetts, where units are renting for a 7.45 percent premium; Knoxville, Tennessee, a 7.18 percent premium; Madison, Wisconsin, a 6.90 percent premium; New Haven, Connecticut, a 6.84 percent premium; and Syracuse, New York, a 6.71 percent premium.

“There’s a supply shortage in terms of needed rental units in these areas. Enough has not been done by local developers and city governments to catch up,” Waller said. “These cities are still in the grips of a rental crisis and facing escalating rents above normal.”

And in South Florida, the epicenter of the nation’s affordability crisis, rent growth is slowing down, though the region remains largely unaffordable for many residents. Renting the typical unit in the Miami metro area decreased by .09 of a percent last month, while rent grew only 2.4 percent over the past year for the same average unit. Although down dramatically from a year ago, area residents are still paying a premium, however, of 5.40 percent. The average rent for the typical unit currently is $2,715.19, while statistical projections suggest rent should be $2,576.03.

“Rents are calming down in South Florida,” Weeks said. “Despite this, 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.”