While the Sunbelt has long held the title for hottest rental markets, the undersupplied Northeast has recently grown in competition, according to a new report from RentCafe.
RentCafe’s Rental Competitivity Report ranked the nation’s most competitive rental markets by analyzing the following metrics: the number of days vacant, percentage of occupied apartments, number of prospective renters, percentage of renters who renewed their leases, and the share of new apartments completed. With this data RentCafe calculated a Rental Competitivity Index (RCI) for the largest and smallest markets.
The report found that North Jersey overtook Miami as the hottest large-sized rental market, with an RCI of 115. Finding an apartment here is no easy task—the severe shortage of housing (newly opened apartments accounted for only 0.27%) and an influx of newcomers pushed North Jersey’s occupancy rate to a high 96.6%. As if the lack of new apartments weren’t enough of a hassle for would-be renters, 72.2% of apartment dwellers in North Jersey also chose to renew their leases, thereby putting even more pressure on the rental market.
Key highlights:
- Miami-Dade County, Florida, comes in second right behind North Jersey with an RCI of 112. Boasting a record-high occupancy of 97.1% (as well as a high lease renewal rate of 70.9%), vacant apartments in Miami are filled within 33 days on average, with 20 would-be renters competing—the highest number on the list.
- Harrisburg, Pennsylvania, and Grand Rapids, Michigan, tie for third with an RCI of 111. Harrisburg slightly overtakes Grand Rapids in most categories except occupied units and share of new apartments.
- Fourth is Omaha, Nebraska, with an RCI of 108. Occupancy rate comes in at 96.4%, with a 0.3% share in new apartments.
- Next is Southwest Florida in fifth place with an RCI of 105. While not as competitive as Miami, this area has an occupancy rate of 96% and 13 prospective tenants to every vacant unit.
- As for smaller markets, Lafayette, Indiana, is the hottest rental market at a whopping RCI of 126. The low-supply area began the year with an occupancy of 96.8% and a high lease renewal rate of 73.8%.
- Fayetteville, Arizona follows closely behind at an RCI of 125. Units stay vacant for the short average of 15 days here, with a 97.6% occupancy rate and 14 prospective renters to every vacant unit.
- Third, and also closely behind, is Lehigh Valley, Pennsylvania, with an RCI of 124. With zero new apartments opened recently and a record lease renewal rate of 80.4%, competition here is fierce.
Major takeaway:
As for the reason for intense competition in the rental market, Veronica Grecu, senior creative writer for RentCafe and author of the report, explained that “The overall housing supply can’t keep up with demand.”
“As the new year began, vacant U.S. apartments were occupied within 38 days, on average, with 8 prospective renters competing for each available apartment amid an occupancy rate of 94.2%. At the same time, 60.7% of apartment dwellers renewed their leases. Plus, with the number of newly opened apartments accounting for an extremely modest 0.43% of the nation’s housing supply, finding a new place to call home can become challenging this time of the year,” said Grecu. “By comparison, one year ago, vacant apartments were filled almost one week faster and there were three more people applying for the same rental. This was especially significant because more renters (64.7%) chose to renew their leases and newly built apartments represented only 0.75% of the total apartments in the U.S. These factors then led to 95.6% of apartments being occupied at this time last year.”
For the full report, click here.
