These Apartment Markets Are Popular With Renters

Renters eager to shed the high rents that come with living in many metros are headed to smaller cities where monthly payments are more affordable, even if they sometimes face strong competition for the apartment they want. The Midwest has become a desired destination for many. So have several small towns, especially those with colleges at their heart.

A new report from RentCafe lists seven Midwestern cities among the top 20 rental markets nationwide in the first months of 2024. Milwaukee, WI ranked just behind the top scorer, Miami. The ranking is based on the company’s Rental Competitiveness Index (RCI). The national score was 73.4, indicating a moderately competitive market. Milwaukee blew past that with an index reading of 87. So did other Midwest locations like the suburban Chicago area (85.3), Grand Rapids, MI (84.5), Cincinnati (82.4), Lansing-Ann Arbor (82.3), Omaha (79.9), and Kansas City, KS (78.5).

“In addition to its cost-effectiveness, today’s Midwest has almost completely shaken off the old ‘Rust Belt’ label. Rather, most of the big metro areas here are buzzing with activity in the tech and manufacturing scenes, thanks to growing sectors like automotive, aerospace and renewable energy,” the report commented.

Another advantage the region’s cost advantage offers is the ability for renters to save toward a downpayment on a home, the report added. Remote work opportunities have added to the appeal of the Midwest.

One consequence of the popularity of Midwestern cities is that they have a high percentage of occupied apartments, several renters beating on each door, and vacant days well below the national average of 41 days – up from 38 at the start of 2023. In Milwaukee it takes just 37 days to find an occupant.

The percentage of apartments in the Midwestern cities listed that were occupied ranged from 95.1% in Milwaukee to 93.3% in Kansas City. The number of prospective renters for each apartment ranged from 10 in suburban Chicago and nine in Milwaukee and Cincinnati to six in the other cities. Urban revitalization programs in Milwaukee have also helped draw young professionals, and a shortage of newly built rentals – which account for just 0.53% of stock – has encouraged 72.3% to renew their leases.

The lack of new construction has driven higher levels of lease renewals in some other areas as well. Suburban Chicago is among them, with new construction at 0.51% of all rentals, and a 68.2% renewal rate. In Grand Rapids, 76.6% of renters renewed for the same reason, helping the occupancy rate to 95.1%.

The nation’s highest renewal rate was in Central Jersey at 79.9%. The Northeast as a whole has too few available apartments and surging demand, the report noted. It found that North Jersey is the nation’s third hottest market for renting with an RCI score of 85.4. Its cities near Manhattan including Jersey City, Hoboken, and Union City as well as others further away are among the most competitive for renters, with high occupancy and lease renewal rates, and nine renters for each available apartment. Brooklyn is also in high demand.

In Florida, Miami continues to dominate the rental market with an RCI score of 91.9. Apartments stay vacant for an average 36 days, and 96.5% are occupied and 14 would-be renters at each available door – only 3.5% of its apartment stock. New construction, accounting for 0.97%, was inadequate for demand and 73.4% of renters renewed. “Miami’s apartment market continues to sizzle, outshining Florida’s waning appeal,” the report stated.

Out West, in Orange County, CA, which saw a 0.59% increase in new apartments, 60.1% of tenants renewed their leases, with occupancy at 96.2%. In the Silicon Valley region, hybrid work and return-to-office policies also increased demand and occupancy rates in towns where no new apartments have opened recently, like Mountain View, Cupertino, Menlo Park, San Jose, Sunnyvale, Redwood City and Palo Alto.

A number of small college towns also scored high on the desirability scale for renters, especially students and faculty members, with high RCIs. Fayetteville, AR – home to the University of Arkansas — led the pack with an RCI of 88.1 and six prospective renters for each apartment. Units disappeared in an average 22 days and 95.1% of them were occupied.

In Lafayette, IN, Purdue University was a draw and 96.9% of apartments were occupied, with 11 prospects contending for each vacant unit. Others among the 20 most sought-after small-town rental markets were Lehigh Valley, PA, Knoxville, TN, Worcester-Springfield, MA, Buffalo, NY, and Asheville, NC.

Despite these success stories, the RentCafe report noted that this year “61% of the 66 large markets we analyzed in this report are less competitive than they were at the end of 2023. Likewise, competition is less intense in 47% of the 73 small markets we looked at. The most common trend is an increase in the number of days that empty apartments stay on the market.” The national occupancy rate fell from 94.2% in early 2023 to 93%, but lease renewals rose from 60.7% to 61.5%.

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