After climbing roughly 1% in June, the national average rent in the US reached yet another record high as rents in small and mid-sized cities continued to outpace their larger peers. But while prices in Midland, Texas and Odessa, Texas led the pack as rising oil prices revived the fortunes of the US energy industry, the usual suspects continued to occupy the top spots, with Manhattan and San Francisco remaining the two most expensive rental markets in the country, according to RentCafe‘s latest monthly rent report.
Here are a few takeaways from the June report, courtesy of RentCafe:
The national average rent reached the all-time high of $1,405 in June 2018, having increased by 2.9 percent year over year, and by 0.9 percent ($12) month over month, according to Yardi Matrix data.
Rents increased in 88 percent of the nation’s biggest 250 cities in June, remained unchanged in 10 percent of cities, and dropped in 2 percent of them compared to June 2017.
The top 20 fastest increases in the country were registered in small cities, where population migration and the strengthening economy are accelerating rent growth.
Manhattan has had the largest year-over-year rent increase of the past 12 months, June having brought a 1.5% increase after a year-long period of decreasing or stagnating prices.
With more families renting today than in years past (as home valuations make ownership out of reach for all but the middle-class and the wealthy, two- and three-bedroom apartments and homes have been the primary drivers of rent growth so far in 2018. However, June’s increases were almost perfectly balanced as rents in one-bedroom and studio apartments caught up to two- and three-bedroom
The thriving oil-industry hubs of the Permian Basin, Midland and Odessa have been leading the nation with rents growing at a spectacular rate since the last significant drop in oil prices.
The latest data shows a 40% increase in Midland compared to June 2017, whereas Odessa rents have increased by 36.6% on average in the same period. Lancaster, California enters the top 5, where rents have seen an alarming 10.2% growth rate over the past 12 months. The 9.9% rent increase in Reno, NV means The Biggest Little City in the World has maintained the its position from last month, when it had posted a 10.7% gain. The Phoenix suburb of Peoria, AZ climbs to 5th place, registering a 9.6% Y-o-Y increase in rents.
When it comes to larger cities, Las Vegas again claimed the title of the fastest growing in that category, with rents rising 7% year-over-year.
Among mid-sized cities, Tampa, Fla. took home the title of fastest-growing rents in June, while three mid-sized California cities – Sacramento, Stockton and Fresno – all made it in the top five fastest growing.
And with the stock of available homes on the market continuing to lag demand, it’s likely home valuations – and by extension, rents – will continue to climb until the already expensive rents and home prices rise beyond the means of the average renter or marginal buyer, a phenomenon that’s already beginning to play out in the most expensive markets.