Renters Rejoice: Realtor.com® Names the Top 10 Markets for Renters
Austin, TX, Oklahoma City, OK, and Birmingham, AL, grab the top three spots with a combination of affordable rental options, economic opportunity, and short commutes
With a surge of would-be renters in the market right now, a new report, Top 10 Markets for Renters, from Realtor.com® found cities in the South and Midwest rank highest for their rental affordability, rental availability, economic growth and shorter than average commute times, making them prime destinations for those seeking both opportunity and quality of life.
Austin, Texas took the top spot with a rent-to-income ratio of 19.7% and a high rental vacancy rate of 9.0%, leading to strong affordability and availability for renters. Oklahoma City ranked second, followed by Birmingham, Ala., San Antonio and Minneapolis. Each of these leading cities is experiencing economic growth, attracting many young professionals. Austin (No. 1 on the list) and Raleigh (No. 9) were also named top rental markets for 2024 college graduates.
“Over the last year, we continued to see strong demand for rental properties, especially among younger generations prioritizing the benefits of renting, like flexibility and relative affordability, while home prices and mortgage rates remain high,” said Danielle Hale, Chief Economist at Realtor.com®. “Despite high demand, there are some bright spots in the rental market around the U.S. in cities and towns that offer renters good job opportunities, a decent commute, flexible lease terms, maintenance free amenities, and more rental options to choose from at relatively affordable prices.”
While no cities from the Northeast or West made it into the top 10, Lawrence, Mass., in the Boston metro area, is the top rental market in the Northeast, and Denver leads in the West; however, the relatively low rental affordability and low rental vacancy rates in both of these markets caused them to rank below the top 10.
These Cities Lead the Way When It Comes to Affordable Rent
The ratio of median rent to household income shows the percentage of income spent on housing. Lower is better, since that typically means households have more income to spend on other things. The top markets as a group are located in metro areas that have an average rent-to-income ratio of 21.0%, suggesting rents made up 21% of a typical household income, on average. A traditional rule of thumb is that no more than 30% of a household’s gross income should go to housing expenses.
Among the top 10 markets, the rent-to-income ranged from a low of 17.7%, seen in Oklahoma City, to 23.8% in Nashville, Tenn.
More Rental Vacancies Means More Options for Renters
A common feature among the top 10 markets is a favorable rental vacancy rate. With more rental options to choose from, renters in these cities may wield greater bargaining power when negotiating with landlords.
The top markets as a group are located within metro areas that have an average rental vacancy rate of 8.8%, surpassing both the town/city average of 6.4% and the metro average of 6.9%.
Among the top 10 markets, the rental vacancy rate ranges from 5.2% to 12.3%. Birmingham (12.3%), boasts the highest rental vacancy rate and Norfolk, Va. (5.2%) has the lowest rate. Additionally, cities in Southern metros such as Nashville (9.2%) and Austin (9.0%) both rank prominently for rental availability. One important explanation for the higher vacancy rates in the top markets could be the surge in new multi-family construction and completion in the South and Midwest, which expanded the overall rental inventory.
Economic Opportunities Lead to a Stable Job Market and More Opportunities
A lower forecasted unemployment rate indicates that renters might face less competition when looking for jobs, suggesting better job security. The top 10 markets as a group are located within metro areas that have an average forecasted 2024 unemployment rate of 3.3%, lower than the 4.0% forecasted town/city average. The unemployment rates in the top 10 markets ranged from a low of 2.9%, in both Minneapolis and Nashville, to a high of 3.5% in Birmingham, Ala., and San Antonio.
The top markets as a group are located within metro areas that have a high average online job posting index. The online job opening market is measured by the Indeed Job Posting Index; the higher the index, the greater the increase in job availability compared to that pre-pandemic baseline. Nashville experienced the highest increase of job openings when compared to the pre-pandemic period. Additionally, cities like San Antonio and Sandy Springs, Ga., both rank high for job openings.
Shorter than Average Commutes Common Across the Top 10 Cities
In addition to abundant rental options and relatively affordable rents, these top markets also offer benefits that may enhance their quality of life. For example, many renters in our top 10 markets benefit from shorter commutes. The top cities on our list boast an average expected commute time of 25 minutes in 2024, this translates to a potential saving of 43 hours per year for a commuter traveling five days a week. The top cities and towns had average commutes ranging from a low of 24 minutes – seen in Oklahoma City, Birmingham, Ala., Minneapolis and Kansas City, Kan. – to a high of 27 minutes in Sandy Springs, Ga.
SOURCE Realtor.com
