These Cities Have the Highest SFR Rent Increases

One analysis after another has said that apartment rents have been falling on average. Not a lot, but a bit here and there. Not necessarily enough from that view to keep pace with rising insurance premiums, tax bills, maintenance, and utility prices.

But what about single-family rentals? The Rentometer Quarterly Report focuses on 3-bedroom single-family rentals and looks across 755 cities split into six regions. Focused more on families who need the room, the results have been better than multifamily. Cities with fewer than 25 new or updated rentals within any quarter weren’t included. Rentals below $500 (min price) or above $10,000 (max price) were also excluded. Data were taken between January 1st and March 31st for 2023 and 2024.

About 75% of the cities in question, or about 567, saw year-over-year increases. And 16% saw double-digit jumps.

In about 19% of the cities, average market rents declined. Altamonte Springs, FL had the largest year-over-year rent decrease of -15%, followed by Santa Barbara, CA (-13%), and Delray Beach, FL (-13%).

Of the fifteen markets that had the largest rent increase in Q1 2024. Out of the 755 rental markets analyzed in this report, Iowa City, IA tied with La Quinta, CA for the largest year-over-year rent increase of 33%, followed by Kokomo, IN (29%).

The fifteen markets with the largest rent decreases include Springs, FL had the largest year-over-year rent decrease of -15%, followed by Santa Barbara, CA (-13%) and Delray Beach, FL (-13%).

The data offer some stark advice. In many markets, there is too much new inventory and not enough demand to absorb it all. That has left a number of previously hot markets showing down and seeing increases in vacancies and decreases in rents. Even when rent rates are at least holding relatively steady, it’s not necessarily enough.

The multifamily industry has been struggling with high refinance costs as well as escalating insurance premiums, utility bills, taxes, and labor — the latter showing greater challenges of late with unexpectedly strong labor markets and increasing prices. Markets have been tough enough to see the Federal Reserve discuss multifamily with office as being of particular trouble for banks.

But single-family rentals are a different category. Many people, including younger families, can’t afford to buy a house but want the amenities of one. There aren’t enough new homes being built to reduce the pressure on demand and rent increases. SFRs in secondary and tertiary markets could make for better financial opportunities.