Renters Face Strong Competition in Peak Season

Renters hunting for apartments during the recent peak rental and moving season often found themselves facing intense competition as they searched for living quarters because a high percentage of current tenants chose to renew their leases, reducing the number of apartments available despite a recent surge in apartment supply. Would-be renters also had to fight off rival contenders in some of the country’s most desirable locations – even though some of those locations may be a little surprising.

Beating out Manhattan, Milwaukee, WI ranked as the third most competitive rental market in the nation. Omaha, NE listed seventh. Louisville, KY came in as the top trending rental market. The calculations are based on RentCafe’s Rental Competitiveness Index (RCI) which recorded a score for the nation of 75.8, “meaning that the apartment market in the U.S. overall is very competitive in peak rental season.” Peak season lasts from Memorial to Labor Day.

The RCI takes into account the number of days apartments were vacant, the percentage of occupancy, the number of competing renters for each apartment, lease renewals, and the percentage of new apartment completions.

The RCI showed that 30% of the 137 markets analyzed were softer than during last year’s peak season. The overall occupancy rate fell slightly from 94% to 93.7%. Vacancies averaged 39 days, two days longer, and there were nine people, compared to 10, competing for each available unit. However, the supply of newly built apartments fell to 0.71% of the nation’s housing stock and 62% of current tenants renewed their leases compared to 60.5% in 2023 – aiming to avoid the higher rents of new leases and possibly earning renewal incentives.

In the 20 most competitive rental markets this peak season, the outlook was much tighter. The RCI in these markets ranged from 91.3 in Suburban Chicago and Miami to 78.8 in Cincinnati. Occupancy varied from 96.6% in Miami to 94% in Baltimore. And the number of contenders for each apartment ranged from nine in Kansas City and Manhattan to 18 in Miami. The report identified the Midwest as the nation’s second most challenging market for renters, with an RCI for the region as a whole of 80. Nine of the nation’s top rental markets were in the Midwest.

In Suburban Chicago – a region that includes nine cities with easy access to Chicago itself – securing an apartment has become extremely difficult, the report commented. “In a surprising turn, Suburban Chicago has tied Miami for the title of the nation’s hottest rental market during the peak season, both boasting an RCI score of 91.3. This signals a shift in America’s rental landscape, with competition intensifying in the Midwest and Miami’s long-held supremacy facing a serious challenge,” the report stated.

“The Midwest’s transformation from its “Rust Belt” past, driven by a diversified economy in tech and manufacturing, is attracting budget-conscious renters seeking affordability, amenities, and nature — in short, the persisting trend of “hipsturbia”.

The 85.4 RCI scored by Chicago itself placed it fifth among the nation’s most competitive markets – up from 16th a year ago. The city’s appeal – despite a relatively high cost of living — is fueled by a surge in corporate relocations and expansions.

Other Midwestern cities including Milwaukee, Omaha, and Detroit also ranked high, the report said, based on affordability, a growing job market, and easy access to the great outdoors. Detroit’s RCI score rose 10.3 points to 80.6 during the year, putting it in 12th place nationally, due to a lack of new construction and an economy that is diversifying from its automotive base into technology, health care and manufacturing.

The nation’s highest RCI –80.4 – was scored by the Northeast region, with six major metros in the top rankings. The list includes New York City, Boston, Philadelphia, Manhattan – with virtually no new construction in the past year — Brooklyn, Queens, and North Jersey, where fewer than 5% of apartments are vacant. Suburban Philadelphia — including cities in New Jersey, Delaware, and Pennsylvania — ranked eighth nationally with an RCI of 82.6 boosted by a growing life sciences industry and a convenient transit system that feeds into Philadelphia itself.

The region with the third highest RCI was the South (76.7), followed by California (73.4), the Southwest (72.6), the West (72.9) and the Pacific Northwest (70.6).

Among small rental markets that are highly competitive, Madison, WI led the rest with an RCI of 90.3, boosted by its low unemployment rate, growing biotech sector, and reputation as a hub for startups. Vacant apartments here are leased faster than anywhere else in the country, often within 23 days, the report noted. Runner-up Fayetteville, AR earned an RCI of 89.7 thanks to its many universities and major employers. Other small cities in the top five included Lehigh Valley, PA, Little Rock, AR, and Harrisburg, PA.

For those looking to the future, the report identifies the nation’s top trending markets as Louisville, Sacramento, Queens, the Piedmont Triad (Winston-Salem, High Point, and Greensboro, NC), Washington, DC, Baltimore, Brooklyn, Detroit, North Jersey, and Las Vegas.