Following two straight months of declining rent prices, industry experts expected more of the same. Historically high prices coupled with seasonal trends that show rents lower during fall and winter months had put a dent in demand. Increases in supply showed in a bump in the third-quarter vacancy rate.
However, a recent report from Rent. shows rental rates nationwide increased by 1.23 percent from October to November. With this uptick, the median monthly rent price inched back up over the $2,000 mark to $2,007.
This surprising move puts the total year-over-year change at 7.45 percent, down from 7.8 percent in October and 8.79 percent in September. But conflicting signals abound. October saw the slowest year-over-year growth in 14 months. And November’s yearly increases pale next to March of 2022, when year-over-year growth hit 18 percent.
A closer look at the data shows the increase driven by price increases in larger two- and three-bedroom apartments and a rebound in prices for the most expensive apartments, which since July had been declining faster than any other group when controlling for price.
The shift in demand to larger apartments aligns with projections from Redfin that many people in 2023 will choose to upgrade apartments rather than buy a house during this period of low inventory and high interest rates. Many of these renters are also opting to take on a roommate or two in an effort to offset high housing costs, increasing demand for larger apartments even further.
Given these general trends, there is wide variation depending on the market. In addition to bedroom type and price level, some metros are driving month-over-month increases more than others. These metros saw the largest month-over-month changes from October to November.
Metros with the largest month-over-month changes
Although all of the following metro areas are seeing rent prices lower than their peaks, they are nonetheless higher than much of the country and have been trending up in recent months, including November.
Miami-Fort Lauderdale-Pompano Beach, FL
The Miami metro area is setting an entirely different standard than most markets. First, rent prices in the area have actually risen for two consecutive months, up 4.1 percent month-over-month in November. The area boasts the third highest such increase compared with other Florida metros, facilitated by pricier ZIP codes in Miami Beach (up 5.6 percent month-over-month) and Lantana (5.5 percent). Fort Lauderdale, Hialeah, Hallandale Beach and Plantation all saw month-over-month increases well over 3 percent.
Reasons for these price hikes are likely because the Miami metro’s housing market has yet to cool off. The median sale price for homes in the area is up 13 percent year-over-year, and there are 16 percent fewer new listings than at the same time last year. This lack of inventory for would-be homebuyers is likely keeping rents higher than they would be otherwise.
Columbus, OH
The Columbus metro area mortgage market is not as hot as Miami but is far from irrelevant. Median sale prices for homes are up 9 percent since last year, and there are 25 percent fewer listings than a year ago.
This lack of homes to purchase is helping keep rental demand (and thus prices) high. Month-over-month, rent in the Columbus metro area is up 3.7 percent.
Much of that increase is due to the desirability of Grove City, where rents are up 9.9 percent since the month prior. Hilliard also contributes, thanks to a 4.4 percent uptick. As is the case with other cities, Columbus rent increases are also connected to historic inflation, the escalating cost of construction and low rental supply.
Milwaukee-Waukesha, WI
November rents in the Milwaukee-Waukesha metro are 2.7 percent higher than they were in October. The housing market isn’t quite as hot, but median sale prices are still 5 percent higher year-over-year. Like other cities on this list, new listings are down more than 17 percent, pushing demand for rentals higher because fewer people can buy a home. Milwaukee proper had the highest rental increase in the region, up 5.6 percent month over month. Low inventory levels for rental properties is also driving up rates in this particular metro.
Minneapolis-St. Paul-Bloomington, MN-WI
The Minneapolis-St. Paul-Bloomington metro was up 2.43 percent from October to November. Of the 16 cities that make up this metro, by far the largest month-over-month increase is in Eden Prairie, MN, up 9.7 percent. Crystal, MN took a dubious second place with a month-over-month increase of 6.2 percent. New for-sale listings in the area are down more than 25 percent, and the median sale price is 5 percent higher than at the same time last year. Coupled with a low rental inventory, landlords are charging more and have stopped offering many, if any, incentives to sign new leases.
Raleigh-Cary, NC
The monthly change in North Carolina’s Raleigh metro area is just above the national median with rent hikes at 2.2 percent. Of the cities in that metro, Garner saw the highest increase at 2.5 percent. Once again, new sale listings are down 23.5 percent. That squeeze in supply has pushed median sale prices up 9 percent year-over-year and has sent rental rates trending upwards.
Metros with month-over-month changes above the national median
Outside of the five metros with the highest month-over-month increases, four additional metros saw monthly increases greater than the national median. These metros all saw month-over-month changes above 1.23 percent, but below 2 percent.
- Birmingham-Hoover, AL: The Birmingham metro area posted a 1.8 percent uptick month-over-month. Most of that increase was driven by the city of Hoover, at 1.97 percent. Birmingham proper came in at 1.35 percent higher month-over-month.
- Seattle-Tacoma-Bellevue, WA: The SeaTac metro, on the whole, rose 1.49 percent, mostly thanks to the cities of Woodinville and Arlington, which increased by 4.78 and 4.37 percent month over month, respectively. Lynwood wasn’t far behind at 3.34 percent.
- Indianapolis-Carmel-Anderson, IN: Month-over-month rental rates in the Indianapolis metro increased 1.41 percent, bringing the median area rent to just under $1,500 per month.
- Cleveland-Elyria, OH: The metro of Cleveland-Elyria increased by slightly more than the national median, at 1.35 percent.
Metros with month-over-month changes below the national median
A handful of cities posted small upticks in rent rates that fell below the national median. Such metros are sprinkled liberally throughout the country, with no one area claiming a majority. Here are a few that stand out, be it ever so slightly.
- Kansas City, MO-KS: Rents in the metro spanning Kansas City in both Missouri and Kansas went up 0.72 percent, month over month.
- San Antonio-New Braunfels, TX: The San Antonio metro barely increased over the half-point margin at 0.54 percent.
- San Francisco-Oakland-Berkeley, CA: Rental rates in one of the most notoriously expensive areas of the country increased by 0.54 percent month over month.
- Buffalo-Cheektowaga, NY: The Buffalo metro saw rent hikes of 0.42 percent.
- Memphis, TN-MS-AR: Rents in the Memphis metro area that span parts of Tennessee, Mississippi and Arkansas bumped up 0.35 percent month over month.
- Nashville-Davidson–Murfreesboro–Franklin, TN: Elsewhere in Tennessee, renters in the greater Nashville area saw rate tick up by 0.30 percent month over month.
- Detroit-Warren-Dearborn, MI: The Detroit metro area, which includes Dearborn and Warren, saw a monthly increase almost as high as Nashville’s. Rents there went up 0.29 percent compared with the month before.
- Atlanta-Sandy Springs-Alpharetta, GA: Rents in the sprawling metro area of Atlanta increased slightly less than Detroit with a month-over-month increase of 0.28 percent.
- Boston-Cambridge-Newton, MA-NH: The Boston metro, which also bleeds into part of New Hampshire, posted a 0.19 percent uptick, month-over-month.
- Hartford-East Hartford-Middletown, CT: Also in New England, rentals in the Hartford metro saw a 0.12 percent increase compared with the month before.
- Orlando-Kissimmee-Sanford, FL: Finally, the Orlando metro saw rents increase a mere 0.11 percent month over month.
The rollercoaster rent ride continues
Clearly, November threw the rental industry for a loop, but researchers at Rent. expect the general downward trend in rent levels seen over the last few months to continue, at least through the winter.
Despite the monthly increase, November’s year-over-year increases remained in the single digits for the third month in a row, accounting for the smallest yearly increase in 15 months. Rents levels have been moderating since its peak in August. That evidence points to prices that will continue to moderate in the mid-term as we return to seasonal trends seen before the pandemic.
Methodology
We analyzed rental property prices in November 2022, the last full month of data, from Rent.’s available inventory to identify our median rent prices at the national, state and metro levels. Our analysis combines inventory and bedroom types into one simple median that covers all available rental units at the time.
The top 50 metropolitan areas in our analysis are determined by U.S. Census Bureau population estimates for 2021.
