The apartment market is finally loosening up. At the same time, competition is heating up in some key markets.
There is an enormous supply of new apartments coming online this year. And rents have fallen for six straight months, now at their lowest levels since March 2022, according to search site Apartment List.
For a one-bedroom apartment nationally, the latest estimated median rent is $1,207; for a two-bedroom it’s $1,359. The nationwide median is down 0.3% in February from January, down 1% year over year and down 4.7% from an all-time high in August 2022, according to Apartment List.
Rents are expected to fall further, with the nationwide multifamily vacancy rate at 6.5% and forecast to rise this year as more units go up for rent.
Still, all real estate is relative, and some apartment markets are hotter than others. A new report from RentCafe, another apartment search site, ranks the most competitive rental markets, with Miami topping the list for 2024.
The rankings are based on five factors: The number of days apartments stayed vacant, the occupancy rate, the number of prospective renters competing for an apartment, the percentage of renters who renewed their leases and the share of new apartments completed recently.
In Miami, apartments now lease within 36 days, according to the report, compared with a 41-day national average. They have 14 prospective renters for each unit compared with the national average of seven, and the city’s occupancy rate is 96.5%, compared with 93% nationally.
Milwaukee comes in second, with apartments renting in 37 days on average and occupancy at 95.1%. Chicago and Grand Rapids, Michigan, are also high on the list, as the Midwest becomes more popular among younger renters due to its relative affordability.
The option of remote work has also sent more people to the region, but the supply of apartments there is dwindling, making it more competitive. The Midwest was the most sought-after region for renting in the report.
“Renting in the Midwest is a good choice for many aspiring homeowners, including longtime residents and newcomers,” according to the RentCafe report. “That’s because this housing arrangement allows them to save up for down payments until they’re able to fulfill the American dream of owning a home.”
While rental supply is rising, demand is sustaining thanks to the short supply of homes for sale in today’s market and rising mortgage rates. Home prices are still high, even with rising mortgage interest rates, making it increasingly difficult for younger Americans to make the transition from renter to homeowner.
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