The rental crisis has impacted millions across the country, as landlords flaunt egregious prices due to population growth, and in some cities, a large influx of college students. According to researchers at Florida Atlantic University (FAU) however, renters might be in for a pleasant surprise in western parts of the U.S.
Out of 100 metropolitan areas measured, 21 are renting at a discount relative to their long-term rental pricing trend, January data from the Waller, Weeks and Johnson Rental Index shows. The Waller, Weeks and Johnson Rental Index is part of Florida Atlantic University’s real estate initiative, and data is researched and presented by Ken H. Johnson, FAU real estate economist; Shelton Weeks, Ph.D., of Florida Gulf Coast University; and Bennie Waller, Ph.D., of the University of Alabama.
Boise City, Idaho, gives potential renters the biggest discount across the nation, as a typical unit is renting at a discount of 5.45%. Other cities offering affordable rental prices include Austin, Texas, a 3.27% discount; Phoenix, Arizona, a 3.15% discount; Las Vegas, Nevada, a 2.88% discount; and Spokane, Washington, a 2.62% discount.
“These were some of the hottest cities in the country seeing rapid population growth over the past few years,” said Johnson. “Developers responded to that demand by building more, and they have slowly overdeveloped the number of multi-family units in the area. Due to rents trading at a discount, it’s likely that renting is the better option than buying in these areas.”
And while some cities are finally seeing rental prices ease, this isn’t the case across the board. In fact, many areas are still falling victim to steep premiums. In Springfield, Massachusetts, for example, units are renting for a 7.45% premium, while renters in Knoxville, Tennessee, are facing a 7.18% premium. Units are renting for a 6.9% premium in Madison, Wisconsin; a 6.84% premium in New Haven, Connecticut; and a 6.71% premium in Syracuse, New York.
“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, as many market-savvy renters—or hopeful renters—are aware, South Florida is one of the main hubs of the country’s affordability crisis, but rent growth is beginning to ease. Although, for a majority of residents, the region is still quite unaffordable.
In Miami, renting the typical unit in the metro area decreased by 0.09% in February, and grew just 2.4% in the past year for the same average unit. While down significantly from a year ago, South Florida residents are still facing a hefty premium of 5.4%. The average rent on a typical unit is $2,715.19, but statistics indicate that 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.”
