12 US Cities Experiencing the Most Explosive Rent Growth

One of the most important factors used to evaluate a potential target investment market is supply and demand.

The demand side of the equation is measured in part by the change in median rent year-over-year – an increase in median rent indicates an increase in the demand for rental properties in a particular area, and vice versa.

Ideally, the change in rent for your target market is positive (obviously) and is greater than the average national change in rent. From October 2017 to October 2018, the average national change in rent was +1.1% (compared to +2.8% and +2.6% over the same time period in 2016 and 2015 respectively). This would indicate that rent growth is sluggish on a national scale compared to previous years. However, the top markets in the country are continuing to outpace the current and past two year averages.

Here are the top 12 US cities where rents increased the most from October 2017 to October 2018:

 

12. Richmond, Virginia

Sean Pavone/Shutterstock

Median 1BR rent: $891

Median 2BR rent: $1,028

Year-over-year change: +2.6%

 

11.Tampa, Florida

Shutterstock

Median 1BR rent: $1,011

Median 2BR rent: $1,258

Year-over-year change: +2.6%

 

10. Jacksonville, Florida

Shutterstock

Median 1BR rent: $881

Median 2BR rent: $1,078

Year-over-year change: +2.7%

 

9. San Jose, California

Silicon Valley Stock

Median 1BR rent: $2,102

Median 2BR rent: $2,634

Year-over-year change: +2.7%

 

8. Arlington, Texas

Kid101

Median 1BR rent: $990

Median 2BR rent: $1,230

Year-over-year change: +2.8%

 

7. Riverside, California

Flickr

Median 1BR rent: $1,064

Median 2BR rent: $1,330

Year-over-year change: +3.0%

 

6. Mesa, Arizona

Redux

Median 1BR rent: $865

Median 2BR rent: $1,078

Year-over-year change: +3.0%

 

5. Phoenix, Arizona

Phoenix New Times

Median 1BR rent: $846

Median 2BR rent: $1,054

Year-over-year change: +3.0%

 

4. Corpus Christi, Texas

Expedia

Median 1BR rent: $846

Median 2BR rent: $1,057

Year-over-year change: 3.1%

 

3. Knoxville, Tennessee

Mapio

Median 1BR rent: $776

Median 2BR rent: $953

Year-over-year change: +3.6%

 

2. Las Vegas, Nevada

Visit Las Vegas

Median 1BR rent: $927

Median 2BR rent: $1,149

Year-over-year change: +3.6%

 

1. Orlando, Florida

iStock

Median 1BR rent: $1,063

Median 2BR rent: $1,273

Year-over-year change: +4.4%

 

If you are investing in one of these markets, do not assume that the future rent growth will be the same. Always conservatively estimate the annual income growth factor – 2% to 3% maximum. That way, if the rental rates slow, you’ll still hit your projections. And if the rental rates continue or increase, you’ll exceed your projections, which means more money for you and your investors!

 

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