If you are a real estate investor that relies heavily on the rent from your buildings or units as income, then you should be concerned about rental increases. You want to avoid buying homes in states with low rent increases because it shows the economy isn’t as prosperous as others and looks for places with high rental increases because you know the income will likely be better. Have a look at this list to see the lowest and highest rent increases across the country between 2021 and 2022.
Our information is coming from the redfin rental report, which is one of the best ways to gauge the average rental change. It shows the year-over-year change in rental prices. Some places have had a small percent rise, while others have actually dropped within the last year! Let’s take a look at the lowest rental increases and then move on to the highest.
Lowest Rental Increases
These cities are ideal for those who are looking for cities that they might want to avoid. Some of these cities have had considerable changes in the last few years that have adjusted their rental increases, but these dips are usually temporary. The stats change from year to year, but the only cities that always have a large change are the higher metro cities like New York or Dallas. The stats on these cities could look completely different by August of next year so make sure you keep up to date with them.
Milwaukee, MI | -11.5%
There was a decrease in rent in this metro city, and this could be due to the rising cost of goods and services that has been happening all across the country. Some places have a lower economy which means that it will be harder for a renter to find someone who will pay an excessive amount for the same thing. If you are an investor, look at finding some good properties to spruce up and add extra amenities so that residents will be willing to pay a slightly higher price.
Minneapolis, MN | -6.5%
This city has also seen a decrease in rent prices over the last year. This could be due to a rise in smaller units that are more affordable for small families. The city also expanded on its single-family zoning, which has made it much easier for developers to find land to build new homes on. Single-family homes and condos have started to become far more popular in the last few years, with many people looking to downsize, and this means rent might show a significant decrease, but it’s just a matter of people moving laterally within the city to less expensive areas.
Kansas City, MO | -0.5%
Kansas has seen a very slight drop in its rental prices, and this might be
due to the low cost of living that the city has. The town is well known for having one of the lowest living costs in the country, and its rental prices usually follow suit to keep up with the economy.
Highest year-to-year increases
These places are excellent choices if you are looking for cities that will offer some great rental returns for your property investments. Keep in mind that some places might have higher rental costs for negative reasons such as the low supply of houses vs. high supply of apartments, higher mortgage rates, or even just an increase in available rental units. It’s a good idea to look into the reason why the rental costs have increased to make sure you know what you’re getting into.
Winthrop, MA | +51%
Winthrop has become a wonderful place to look at if you are an investor who is looking to make some decent income from rentals. There are plenty of great homes available all over the city at fantastic prices. The town has a larger percentage of renters than most cities, with 47% of residents renting their homes. Renters are looking for affordable homes all over the city, so it’s an excellent place to look if you want some quick income from rent.
Cincinnati, OH | 38%
When a city becomes less rural and more metro, the rental prices will likely increase. Cincinnati has seen a significant increase in apartment and condo buildings being built in the city over homes, and more people than ever are looking for high-end luxury condos. A condo gives the residents excellent access to the town while keeping them in a beautiful home away from all of the traffic, and that could be why Cincinnati has seen such a large increase in condo rentals.
Seattle, WA | 32%
If you are wondering why the rent has become so much higher in Seattle, then just look to the skies. Many people have started to look for places to live with mild weather and a remote feeling so they can get away from the big city life. Seattle has always been seen as a cultural mecca, and with a rise in WFH jobs, more people can live out their cottage core fantasies while making a steady income.
Looking at the rental increase over the year will give you a good idea of what the city will look like in the future but be aware that the numbers can change at any time. Do some research into the rent from previous years and compare it to the average rent now to see what kind of change happens and check out the possible reasons for a dip or jump in rent. This is one of the best ways to identify a stable real estate market, and it’s a good idea to have this knowledge before you start investing.