Photo: Robert Clark
It was a bleak February for many US renters with prices rising in most markets, but it was particularly challenging for those renting in smaller cities.
The most significant rental increases in February were seen in “smaller” cities, far outpacing the growth recorded in larger cities, according to a report released yesterday by listing site RentCafe.
Over the last year, national rents rose 2.7 percent to $1,364 in February. This was mostly unchanged from the previous month.
Rents were up annually in 87 percent of the 250 biggest cities in February, unchanged in 11 percent and fell in 2 percent.
Some 19 of the top 20 cities with the fastest growing rents were small cities.
Rents were up nearly 40 percent year-over-year in Odessa, TX — the largest gain recorded among the cities in the study. Midland, TX, another small Texas city, recorded a substantial 35 percent annual gain in February.
“Population migration is occurring to affordable Southern and Southwestern states where economic growth is outpacing Northern regions,” says Doug Ressler, Yardi Matrix senior analyst, in the digital release. Yardi Systems is RentCafe’s parent company.
Americans are starting to flee higher-taxed coastal markets (think San Francisco and New York City) in search of homes in more affordable — and often smaller — cities with lower taxes. And this increased demand is fueling rental price growth.
However, the “unusual” rent increases recorded in Odessa and Midland could be nothing more than prices rebounding after a big drop in oil prices about two years ago that highly impacted these metros, according to RentCafe.
The top five cities list was rounded out by: Lancaster, CA, Reno, NV and Fort Collins, CO — all West Coast metros.
Lubbock, TX had the slowest pace of rental price appreciation of all the metros included in the study. Lubbock rents fell by 4.8 percent year-over-year in February.
While on the other end of the spectrum, rents were down in the country’s largest city, New York. Rents fell by 0.2 percent in Manhattan and by 0.7 percent in Brooklyn from last year in February. (RentCafe categorizes Manhattan and Brooklyn as their own cities.)
With a 6.6 percent annual increase, Las Vegas, NV had the fastest rising rents among the largest cities in the study.
“Rental prices have been rapidly increasing in Vegas for more than a year now, thanks to a rebound in home prices which is boosting the demand for rentals,” says RentCafe in the digital release.
Meantime, mid-sized cities recorded “mid-sized” price growth compared to other markets in February.
Sacramento, CA had the fastest growing rents at 7.9 percent year-over-year in this category, while New Orleans, LA was the only mid-sized city to see a decrease in rents from last year — although it was a small one. New Orleans rents fell 0.7 percent in February.
Click here to read the entire release.