Here Are the Most Competitive Apartment Markets

Better have sharp elbows if you’re hunting for an apartment in some of the most competitive rental markets in the U.S., large or small. In these markets, vacancies are low and as many as 22 contenders might be fighting to dump their boxes in the unit of their choice.

What makes the rental market in a particular area especially hard to break into? According to a?study?by RentCafe there are five factors: the number of days apartments remain vacant, the percentage that are occupied, how many renters are competing to rent, how many renew their leases, and the percentage of apartments completed in a year.

From this data a Rental Competitivity Index (RCI) is calculated. For the U.S. as a whole, the RCI was 59.5 in 2023. In the markets with the least availability of the 139 studied, the RCI was considerably higher.

In markets not in this fortunate group, the picture was less cheerful. “In at least four of the five relevant metrics for competitivity, 86% of the 139 rental markets analyzed became more relaxed in 2023 than they were last year,” the report stated.

New apartments coming on the market in some areas along with lingering economic turmoil affected all metrics. Generally, vacant apartments stayed on the market for 38 days in 2023 – one week longer than in 2022, and there were fewer takers. Occupancy rates fell from 95.3% in 2022 to 94% in 2023, since renters had more apartments to choose from – a factor which encouraged just 60.2% to renew their leases, compared to 62.7% in 2022.

In other areas, the outlook for landlords was much more optimistic.

Regionally, the Midwest was the hardest market for renters to break into, with three cities among the top five nationally. The region’s lower cost of living, large living spaces facilitating remote work, and access to the great outdoors all helped, the report found. More than two-thirds of occupiers renewed their leases in almost all Midwestern locations, intensifying the competition among would-be renters.

“The Midwest is experiencing an economic revival, fueled in part by the Rise of the Rest fund [launched by the entrepreneur and investor Steve Case] that aims to boost entrepreneurship and innovation outside of the coastal hubs,” the report stated.

Among cities, Miami had the nation’s hottest rental market in 2023 with an RCI of 122, driven by an influx of residents from all over the world. Despite a 3.7% increase in the number of apartments for rent, demand exceeded supply, the report said. With 71.2% of renters renewing their leases, there were an average of 22 applicants for each vacant rental.

North Jersey’s RCI score of 116 put it in second place nationally in 2023, up from 5th in 2022, and the only Northeastern market to score above 100. An attractive location for millennials seeking affordable housing outside New York City, it had an occupancy rate of 96.3%, with 70.5% of renters renewing. With 14 renters vying for each unit, vacant apartments took just 34 days to rent, making it one of the toughest rental markets in the country, the report found.

Milwaukee came in third, with an RCI of 113, despite a 2.91% increase in housing supply since January. Apartments stay on the market for 33 days, with 14 renters for each. Less than 5% of the metro’s apartments are available at any time, and 70% of renters renew.

The expanding health care sector helped Grand Rapids, MI achieve fourth place with an RCI of 109. Omaha’s RCI of 107 and expanding population “makes it a real challenge to secure a rental” with a 28-day rental turnover.

In the Northeast, suburban Philadelphia was the hottest rental market – and 8th in the U.S. – with an RCI of 99, helped by a lack of new supply and an occupancy rate of 94.7%. In Brooklyn, even wealthy households had difficulty finding apartments, given its RCI of 98. Manhattan only took 22nd place, perhaps because its high lease rates discouraged less affluent households.

In California, Orange County proved the most competitive rental market. Occupancy stood at 95.9% as 60.5% of rents were renewed, while 13 households fought for each space. The market was also tight in San Diego, though only half of renters renewed their leases. In Silicon Valley, affected by a 1.71% increase in supply and lease renewals well below the national average, apartments still moved in 33 days. Despite the layoffs of the last 12 months, the rental market remains moderately competitive as many laid-off tech workers joined start-ups.

Some small markets – especially those encouraging start-up businesses or located in college towns – also saw rental demand shoot up. In Fayetteville, AR, which bills itself the StartUp City of the South, occupancy stood at 97.2% and new occupants took over within 18 days, even though supply rose by 2.3%. Other competitive small-town markets included Providence, RI and Harrisburg, PA.

Courtesy:? Philippa Maister

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