10 US Cities Where Rents Will Rise the Most in 2021

The COVID-19 pandemic has accelerated the trend of people, especially the millennial generation, moving out of high-cost gateway markets. Pre-COVID, the millennial generation moved to be closer to family and/or start a family. After the onset of the pandemic, even more people began (and continue) fleeing high-cost gateway markets. For example, since many people are working remotely, they prefer the lower rent payments for a larger unit size rather than paying higher rents for a tiny apartment.

Many suburban, tertiary, and tech hub markets benefited from this migration trend in 2020. Markets with the most growth in 2020 include Sacramento (6.1%), Inland Empire (7.3%), Phoenix (4.6%), Tampa (3.9%), and Las Vegas (3.8), Boise (9.5%), and Scranton-Wilkes-Barre (7.8%), according to YardiMatrix.

2021 is a new year, yet many of the challenges from 2020 remain. Overall, YardiMatrix predicts rents will rise by 2.0% nationally in 2021 (compared to -0.8% in 2020). They predict rents will rise the most in Las Vegas (4.8%), followed by Salt Lake City (4.3%), Austin (3.9%), and Indianapolis (3.9%).

Investing in a market where rents exceed the national average is ideal. While you still want to make conservative rent growth assumptions based on a rental comparable analysis, market-driven rent growth allows multifamily investors to exceed their return projections.

Here are the 10 cities where rents are forecasted to increase the most in 2021:

 

 

1. Las Vegas

YardiMatrix 2021 Rent Forecast % Change: 4.8%

2020 Rent % Change: 3.8%

2. Salt Lake City

YardiMatrix 2021 Rent Forecast % Change: 4.3%

2020 Rent % Change: 3.8%

3. Austin

YardiMatrix 2021 Rent Forecast % Change: 3.9%

2020 Rent % Change: -3.6%

4. Indianapolis

YardiMatrix 2021 Rent Forecast % Change: 3.9%

2020 Rent % Change: 3.5%

5. Phoenix

YardiMatrix 2021 Rent Forecast % Change: 3.7%

2020 Rent % Change: 4.6%

6. Winston- Salem

YardiMatrix 2021 Rent Forecast % Change: 3.6%

2020 Rent % Change: 6.6%

7. New Orleans

YardiMatrix 2021 Rent Forecast % Change: 3.5%

2020 Rent % Change: 0.6%

8. Birmingham

YardiMatrix 2021 Rent Forecast % Change: 3.4%

2020 Rent % Change: 2.8%

9. Sacramento

YardiMatrix 2021 Rent Forecast % Change: 3.4%

2020 Rent % Change:6.1%

10. Cincinnati

YardiMatrix 2021 Rent Forecast % Change: 3.3%

2020 Rent % Change: 2.2%

 

Here is a data table summarizing 11 to 20:

Market YardiMatrix 2021 Rent Forecast % Change 2020 Rent % Change
Atlanta 3.3% 3.0%
Columbus 3.3% 2.3%
Louisville 3.3% 1.8%
Raleigh 3.2% 0.0%
Richmond 3.1% 6.5%
Memphis 3.1% 5.9%
Tucson 3.0% 5.9%
Nashville 3.0% -1.5%
Tampa 2.9% 3.9%
Houston 2.8% -1.9%

 

Forecasts are never perfect

Not many people, if anyone, could have predicted that the market with the greatest rent growth in 2020 would have been Boise, Idaho. Therefore, a strong rent growth prediction should not be the only reason why you decide to invest in a market. However, like all forecasts, rent growth predictions are good guides to locating potential investment markets on which you perform a deep dive analysis.

Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action.

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Joe Fairless