Report: February Rental Market Showed Promise Despite COVID-19 Concerns

25 March 2020

Report: February Rental Market Showed Promise Despite COVID-19 Concerns

RentCafe

RENTCafé National Rent Report: The Average Apartment Rent Was $1,468 in February.

Key takeaways:

  • The national average rent in February 2020 was $1,468, up 3.2% compared to the same time last year. 
  • The most expensive apartments are in Manhattan, $4,208 per month, while the lowest rents are in Wichita, KS, $665 per month.
  • Of the largest renter hubs, Seattle apartments saw the highest net increase in rent in one year, $113, while Houston rentals saw the lowest rise in price, $21, compared to February 2019.

The February national average rent went up by 3.2% year-over-year

The average apartment rent was $1,468 in February, up $46 since last year, according to apartment data from Yardi Matrix. February apartment rents maintained the same pace as in January, rising by 3.2% year-over-year. Overall, rents are growing a bit slower than the same time last year, when they were rising at a 3.5% yearly rate.

A decade of thriving apartment construction and lower interest rates is expected to put some pressure on rent prices nationwide. At the same time, the largest job powerhouses in the country continue to demand high prices as they remain attractive to talent in search of higher incomes and vibrant lifestyles.

According to Doug Ressler, manager of business intelligence at Yardi Matrix, the housing market was strong in February but will likely be affected by the COVID-19 pandemic. The economy still stands to benefit from ultraslow rates. Homeowners are refinancing while renters are seeing normalized rent growth which reduces their monthly payments and allows them to spend in other areas. We haven’t seen the impact of the COVID-19 pandemic in official data yet, as February employment growth was very strong, jobless claims did not increase and rent growth continued its steady increase. However, the coming weeks and months will likely come with employment cuts and a slowdown in trade.

70% of the largest renter hubs have rents below the national average

14 out of the 20 largest apartment hubs have kept rental rates below the $1,468 national mark in February. Five of these cities are from Texas. Austin is the priciest renter hub in the southern state, with a $1,439 average rate, while San Antonio apartments ($1,049) are the cheapest for renters. Meanwhile, Dallas apartments rented for $1,250 on average in February, while rentals in Fort Worth went for $1,128. After a year of subdued growth, Houston’s $1,118 average rent was slightly lower than in most Texas apartment hubs.

Chicago ($1,943) dethroned Houston as the renter hotspot with the slowest yearly increases in February, after a 1.8% rise since 2019. Houston ($1,118), Manhattan ($4,208) and Los Angeles apartments ($2,524) closely follow, with rates going up by 1.9% in all three. While rents in these hubs continue to rise, a spillover effect has begun taking hold of the nation’s most expensive cities. In the past decade, New York, Los Angeles and Chicago had the highest internal population loss out of all U.S. metros. Their residents moved mostly to cheaper nearby cities, partly explaining why rates rose at a slower pace than in other areas.

Large cities: Rents in the South and Southwest are rising the fastest

Southern and southwestern cities take up three spots among the top five large cities with the fastest-growing rents. Phoenix apartments take the lead after a 9.6% yearly increase, which brought their average rate up to $1,141. The Arizona job hub has grown exponentially in the past few years, especially as it’s become a prime migration spot for residents from more expensive cities in California.

Nashville ($1,428) and Charlotte ($1,259) also made it to the top five, with their average prices going up by 6.3% and 5.6%, respectively. Both cities are going through a period of rapid development and are now increasingly known as “southern boomtowns”. Around the country, apartments in Baltimore were 2.1% pricier compared to February last year, Seattle rates went up by 5.5%, while Philadelphia rentals saw a 3.6% yearly price hike.

Mid-sized cities: The slowest rising apartment rates are in the South

While rents are growing the fastest in large southern cities, the opposite is true when it comes to their mid-sized counterparts. Prices for rentals in Lexington, KY ($914) increased the slowest in the past year, going up by 1.3% since February 2019. Global business hub Miami ($1,702) also made it to the ranking after a 1.7% yearly rise, and so did Atlanta ($1,467), where rents went up by 2.2% year-over-year. Around the country, rates for apartments in Santa Ana, CA increased by 3.1%, Colorado Springs, CO rents went up by 6.1%, and rentals in Pittsburgh, PA were 4% more expensive than in February last year.

See the complete list of cities at the end of this report

Small cities: Phoenix Metro dominates the ranking of fastest price increases

Two small cities from the Valley of the Sun registered some of the most rapid rate increases in the nation. Glendale apartment rents went up by 9.2% since February last year, reaching $1,045 — the third fastest increase in the country. Chandler is also present in the ranking, with a 7.9% increase, which brought its average rent up to $1,390. Both Glendale and Chandler are part of the rapidly evolving Phoenix Metro, which has a significant impact on the runup in rents. In essence, economic growth and migration from California made its mark on the entire area. By comparison, Modesto, CA apartment rents went up by 6.3% in February, Grand Rapids, MI apartments rented for 5.3% more on average, and Frisco, TX’s average rate increased by 3.6% in the past year.

Curious about rents in cities like Las VegasCharlotte, or Austin? See the average rent price in your city by using this interactive table: