Have you ever wondered where the highest rent in the US is? Which cities, specifically, can landlords expect to receive the highest rent in the US? If for nothing else, owning rental properties in a market where asking prices are high could increase your net operating income (NOI) considerably. It may literally pay to know where you stand to make the most money in the rental market.
The US housing market has become synonymous with cycles, not the least of which will witness significant rises and drops in prices. As a result, we have seen a great deal of equity return to places it was once thought gone forever. However, as prices have increased, so too have rental rates. In fact, rents are historically high throughout the US housing market, and there doesn’t seem to be any sign of them tapering off anytime soon. It’s worth noting, however, that while renters may not love the idea of paying more, those with passive income portfolios are enjoying the current state of the US housing market.
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Buying Vs Renting: US Housing Market Analysis
As the US housing market continues to flourish, one thing has become very apparent for non-homeowners: rental prices are rising. The surge in rental costs isn’t surprising, considering the national homeownership rate continues to drop. In 2018, homeownership dropped to a lower rate than in 1994, when the rate was bottomed out at 64.2%.
What’s interesting about this trend is that renters are migrating towards suburban areas. This shift first began during the onset of the COVID-19 pandemic, when many people left densely populated cities. Now, we can see data on rental price changes as urban areas become less popular for renters. Notably, San Francisco saw a 12 percent decrease in average rental rates over the last few years. In contrast, many smaller neighboring cities saw an increase.
Over the last year, the industry has also seen a dramatic drop in inventory as home supply levels have been unable to keep up with demand. This has resulted in higher home prices overall, and has consequently driven more people to the rental market.
With more people turning to the rental market to meet their housing needs, rental rates in many areas have increased. “With homeownership rates falling, it makes sense for landlords to continue to raise pricing on their rental units, especially in markets with tighter inventory,” said Sam Radbil, spokesman for rental listings firm Abodo.
Homebuyers and renters will need to pay attention to these increased prices over the next year and monitor the effects of inflation on the market. Expect interest rates to increase, and watch out for consumer price changes which can eventually impact rental and sale prices.
What Is The Highest Average Rent By City In 2022
Many investors are waiting to see what changes 2022 brings, especially for real estate. When it comes to the cities with the highest average rent, do not expect to see many changes. A new report from Zumper shows only slight changes when compared to the cities with the highest rent in 2022. Keep reading to learn more:
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New York, NY: $3,260
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San Francisco, CA: $2,910
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Boston, MA: $2,660
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Miami, FL: $2,500
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San Jose, CA: $2,420
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San Jose, CA
Despite many tech companies’ decisions to continue a remote-friendly work policy, the demand in San Jose has not changed too much. Average rent is only slightly under its 2021 level, coming in at $2,420. Even with the slight fluctuation, this is still one of the most expensive markets in the country.
Miami, FL
The average rent in Miami has continued to increase, following a dip at the start of the COVID-19 pandemic. The average rent of a one-bedroom unit is roughly $2,500. The increase in line with the increased demand seen throughout Florida in recent years.
Boston, MA
Boston has seen a slight decrease in average rent year-over-year, with the current price for a one bedroom at $2,660. However, despite this decrease, many experts wonder if Boston could soon surpass San Francisco’s historically high rental rates.
San Francisco, CA
The average rent for a one-bedroom in San Francisco is currently around $2,910, right under where it was in 2021. While many cities on our list have started to rebound following a COVID-19 related dip in demand, San Francisco has not followed the same trend. Although, it has remained one of the most expensive rental markets in the country.
New York, NY
The most expensive rental market in the US remains to be New York. The average monthly rent for a one-bedroom is roughly $3,260. This is about a $500 decrease from 2021, however as demand continues to increase prices are likely to follow.
What Was The Most Expensive Rent In The US In 2022?
According to Apartment List, rental prices increased somewhere in the neighborhood of 17.8% over the course of 12 months; that’s a significant development, considering rents actually declined 1.4% from January 2020 through January 2021. That latest increase was so significant, in fact, that the current national median rent is $120 more than where most pundits expected it to be at this point. It goes without saying, but rental appreciation has increased far beyond anyone could have imagined.
The largest contributor to rental increases over the last year was New York City. According to Apartment List’s latest National Rent Report, “The nation’s largest city is also the place where rent prices have grown the fastest over the past 12 months.” Rent in New York City increased 33.5% in the last year, placing it firmly in the most expensive position.
Rental Trends Affecting the Market In 2022
The biggest impact on the rental market in the last year is undoubtedly the pandemic, which has turned most in-person tasks virtual. Renters should expect virtual property tours and online meetings to say over the next year. Further, renters should be prepared for competition during their apartment searches.
Regional trends have also been interesting to watch over the last year and will continue in 2022. For example, many East Coast cities saw rental rates return to pre-pandemic levels. Renters in these markets should watch out for price increases over the next year. In other markets, such as Austin, Phoenix, and Denver, renters should watch out for rental increases and competition as well. These markets have shown steady growth, a trend expected to continue in the new year.
What Was The Highest Average Rent By City In 2021?
Real estate had experienced several dramatic changes in 2021 but one constant has been the cities with the highest rent. Perhaps unsurprisingly, some of the country’s largest urban areas continue to have the highest average rents. According to research from Apartment Guide, are some of the most expensive real estate markets in 2021 for renters:
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New York, NY – $3,825: The most populous city in the country moved up two spots on the list and is now the most expensive rental market this year. The average rent for a one-bedroom apartment in NYC is currently at $3,825. Average rent is expected to increase as companies move their employees back into offices in the city.
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San Francisco, CA – $3,188: San Francisco has experienced one of the most significant decreases in rent prices in 2021, going from around $3,500 to $3,188 for a one-bedroom apartment. That being said, the city is still high on the list for the most expensive rent in the country. Many attribute this year’s decrease to the pandemic and its effects on the job market.
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Boston, MA – $3,117: Third on the list is Boston, where a one-bedroom apartment roughly costs $3,117 a month. The steep rent price can be attributed to high demand and low supply. Boston has experienced consistent population growth for the last decade, and there aren’t enough apartments to keep up with demand.
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San Jose, CA – $2,476: San Jose remains one of the most expensive rental markets, with an average rent of $2,476 for a one-bedroom apartment. Despite COVID-19 pushing many companies to adopt work-from-home policies, average rent in the city rose above 2020 levels. The trend is expected to continue as San Jose continues to experience high demand from renters.
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Miami, FL – $2,280: Miami saw a dramatic decrease in average rent during the onset of the pandemic, but demand has since driven the rates back upwards. Miami, and a few other cities in Florida, have seen increased demand and prices year over year as people move to the Sunshine State.
What Was The Highest Average Rent By City In 2020?
The 2020 real estate market has seen a number of changes, some of which were entirely unexpected. That being said, the top rental markets remain to be cities with high job and population growth. According to a study by Zumper, the following markets have the highest average rent:
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San Francisco, CA: $3,500
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New York, NY: $3,000
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Boston, MA: $2,590
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Oakland, CA: $2,500
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San Jose, CA: $2,450
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Los Angeles, CA: $2,260
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Washington, DC: $2,260
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Seattle, WA: $1,890
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San Diego, CA: $1,790
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Miami, FL: $1,800
What Was The Most Expensive Rent In The US In 2020?
San Francisco has been home to the most expensive rent in the US for several years in a row, but average rents are not increasing year to year as much as they have in the past. The reason so many of the most expensive rental markets remain that way is simply a lack of space. The year’s highest rents belong to some of the country’s most populated cities. Additionally, as in years past, cities remain attractive for renters who find themselves “settling down” and buying properties much later in life. The trend of living with roommates or friends also continues to attract new tenants to some of the most popular markets. Stacy Brown, Director of Technical Training atReal Property Management, states that “one of the disadvantages of owning rental property in a city with high average rent is they tend to have higher tax rates. The market rent drives property values higher. An advantage, however, is you will be able to get more quality and qualified renters to place in those properties.” Learn more about the year’s most expensive rental markets below:
5. San Jose, CA
Located in the heart of Silicon, San Jose has seen high rental prices for similar reasons: population growth and tech industry expansion. While the average rent of a one-bedroom in San Jose has decreased from $2,490 in 2019 to $2,450 in 2020, the market remains on the top ten list for most expensive rental markets in the country. This can be seen a little better by looking at average two-bedroom rents, which increased by .3 percent in the last year to an average price of $2,910.
4. Oakland, CA
Oakland is another Bay Area city to make the list of most expensive rent in the US. Rental prices are slightly more expensive than San Jose, at $2,500 on average for a one-bedroom. However, compared to 2019 average rents, Oakland did see a pretty significant jump from $2,350. This increase in demand could be yet another result of limited space and increased job growth in the area.
3. Boston, MA
This East Coast city is another market with a steep year-over-year jump. A one-bedroom in Boston increased from $2,490 in 2019 to $2,590 in 2020. Investors may find it interesting that while the average rent for one-bedroom apartments increased, two bedrooms saw a slight decrease. According to Zumper’s national rent report, two-bedroom rentals dropped around .7 percent year over year. The average two-bedroom rent is now around $2,930. However, it remains to be one of the most expensive markets as a whole.
2. New York, NY
It often surprises beginner investors to learn that New York is not the most expensive rental market in the US, though it is close. The average one-bedroom rent for 2020 is hovering at around $3,000. This is a one percent increase year over year, a trend that many are predicting will continue.
1. San Francisco
At number one on the list, this California city has an average rent of $3,500 for a one-bedroom apartment. San Francisco has long been one of the most expensive rental markets in the US, and it shows no signs of slowing down. Though the year-over-year increase is less than one percent, this city has gotten consistently more costly for renters in recent years.
Summary
Many of the cities with the highest rent in the US housing market have continued to become more costly since the end of the last recession. As rents continue to rise, those looking to build a passive income portfolio may find it difficult to accumulate assets with such high potential. As a result, it may be a good idea to look into secondary cities, where rental prices are high but not as high as those mentioned above. In addition, as experts speculate what the year ahead will hold, investors should look carefully at potentially new markets to invest in. When done correctly, a passive income property managed in a popular rental market can be quite profitable.
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