consequences One of the most disruptive periods of our time, early 2021, the hottest US rental markets and most In-demand locations for tenants were certainly not what you’d expect.
In an attempt to evaluate the competitiveness of our country’s 125 largest rental markets, we found that mid-sized markets such as Central Valley, CA, Spokane, WA and Boise, ID were the most sought-after last quarter. These emerging tenant hubs share a similar history, attracting tenants from larger metropolitan areas with a mix of cheaper, slower living and a growing number of options. Coupled with a shift towards remote working, the country’s midsize tenant hubs faced a boom in the first quarter of the year.
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“The largest markets and the surrounding outskirts show that tenants are clearly striving to get more square feet or more amenities for the same price within and near these hubs. Residents of large gateway markets “trade” and with work-from-home policies, suburban locations near these areas benefit from this behavior. “Says Doug Ressler, manager of business intelligence at Yardi Matrix.
To rank the hottest rental markets in the country, RENTCafé has researched the most insightful industry metrics for competitiveness:
• What percentage of the apartments were occupied
• How many days were free?
• How many potential tenants have applied for apartments?
• The rental fee price trend
At the national level, U.S. homes were empty for an average of 39 days in the first quarter of 2021. 94% of the rents were occupied during the period, with an average of 11 tenants per apartment in competition. The rent trend in the first three months of the year was 20 and showed slight growth.
The nation’s hottest markets arise from medium-sized locations
The hottest rental markets in the country have one thing in common: with a few exceptions, most are medium-sized. The Central Valley, which includes emerging California hubs like Fresno, Bakersfield, Stockton and Modesto, is the hottest rental market in the country with a competitive value of 5.5.
Use the bar on the right to scroll through the table to see the full ranking.
The story behind the meteoric rise of the Central Valley becomes an archetype among the country’s medium-sized cities. In a chicken and egg scenario, these markets attract more and more residents who are looking for cheaper alternatives to expensive markets, moving from traditional industries (in this case agriculture and energy) to more diversified labor markets. As the days when Central Valley was known for its Transit cities are fading, Tenant to have I’ve kept an eye on this area and made it the most competitive market in the US for the first three months of the year. The mid-sized Californian co-markets Sacramento and the Inland Empire also made the ranking as more people from LA and the Bay Area are moving, according to RedFin.
Spokane, WA and Boise, ID, rank second and third and share a similar trajectory. With a competitive grade of 10, Spokane apartments are in great demand from many potential tenants. The area has made headlines since Amazon announced plans to open a new fulfillment center in town, but the market has been on the rise for some time. Spokane’s mix of small businesses and high-paying government, medical, and higher education jobs has drawn Puget Sound residents for years, particularly from the more expensive Seattle area. Meanwhile, third place Boise, ID, came to be known as Prime Moving hub for Californiansas the area offers a balance between slow (and cheaper) life, short commutes, and convenience for big cities.
The 30 most sought-after rental markets captured by competitiveness
Five of the country’s largest tenant hubs are also among the 30 hottest housing markets, and they all come from the south and southwest. El Paso leads this trend with a competitive score of 29.5, making it the 16th hottest rental market in the country.
Phoenix, AZ also achieved the hottest ranking in the rental markets with a competitive score of 39.5. The rapid growth of the Arizona job hub has attracted an increasing number of tenants from the surrounding states in recent years. More recently, the emerging tech sector of the market has spawned a new nickname for the area, the Silicon Desert, while the local economy has weathered the pandemic better than other major markets.
“More Americans are being vaccinated, employment is rising, and hybrid work models are rising, showing growth for the multi-family and commercial real estate industries. The current climate increasingly points to economic growth in 2021, which offers the housing market considerable and risk-averse potential, ”added Ressler.
Florida also has two major markets in the rankings, Jacksonville and Tampa, which both score around 40 points. These tenant hubs have been some of the fastest growing in the nation for some time – Jacksonville in particular was the 15th fastest growing city in the nation for the past decade. Last but not least, Memphis, TN, follows the two with a competitive score of 40.75.
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