Top 11 US Cities Where Rent Is Rising the Fastest
Rents continue to skyrocket, most notably in the South and West. For investors, this means a prime window of opportunity. Here are the top 11 cities with the largest rent increases year-over-year in Q3, using data from online report source RentRange.
Q3 year-over-year increase: 23.6%
Average yield: 9.1%
This tropical town may see a much-needed high-rise condo if the developer Jaxi Builders is able to sell 60% of its units. The project, called Allure, was actually planned for in 2004, but was put on hold when the economy tanked.
Q3 year-over-year increase: 17.6%
Average yield: 6.6%
This sunny California town had the second-highest rental rate increase, as more tech workers find it more economical to commute from Sacramento to the Bay Area for their tech jobs. The sale of two apartment complexes that were at least 50 years old proves that investors are keeping their eye on the city.
Q3 year-over-year increase: 17.2%
Average yield: 9.7%
A recent poll shows Sarasota residents to be concerned about the city's growing population and increased construction. The mass influx of people flocking to new developments--not to mention loud construction noises--has led to complaints, with one woman calling the new Sarasota "a zoo."
Q3 year-over-year increase: 17%
Average yield: 5.6%
San Francisco unsurprisingly makes the list with its notoriously high rental rates. In fact, rents are so damn high, one Google employee decided to live out of his truck, refusing to pay the $2k a month for corporate housing. Despite exorbitant rent charges, average yields for landlords stay relatively low.
Q3 year-over-year increase: 16.5%
Average yield: 9%
Affectionately known as Chuck, Charleston has had a Millennial boom that's hit the charming Southern town in recent years thanks to the jobs produced by the construction of new automobile plants. These youngsters prefer renting rather than purchasing homes. (Thanks, student debt!)
Q3 year-over-year increase: 16.3%
Average yield: 5.6%
Permits for multifamily construction in the City of Angels dropped by nearly 15% back in September, meaning there just aren't enough homes in construction for all those angels. That may be due to lack of land, but either way, it's driving price of construction and rents up.
Q3 year-over-year increase: 16.1%
Average yield: 4.7%
Since Silicon Valley's tech boom kicked off in 2000, rents have taken off, reaching almost crazy levels. Last year's 16.1% increase was just the latest in a series of quarterly increases. The current average asking rent for one bedroom is still $2,257, up $71 from the last quarter.
Q3 year-over-year increase: 14.6%
Average yield: 6.7%
The average montly rent in Denver is $1.9k, higher than the national average of $1.3k. Although both rates have increased since Q3 2014, analysts believe that the higher-end rental market could be slowing since they take longer to find renters.
Q3 year-over-year increase: 14%
Average yield: 13.4%
Dallas is becoming a hot spot for investors of all assets, with the best total annual returns (19.54%!) out of almost all other major metro cities.
Q3 year-over-year increase: 13.6%
Average yield: 5.6%
Sad news for the City of Good Living. A study analyzing whether it's better to buy or rent in San Diego called it a toss-up, with rent only 10% cheaper than buying—a sharp decline from the 27% San Diegans could save just three years ago. In other words, renting is just as expensive as buying a house, which isn't possible for many in the first place.
Q3 year-over-year increase: 13.2%
Average yield: 9.7%
Nashville is known as an "18-hour" city, a market where the job market is expanding quickly. As a result, rental rates are getting pushed up, making it a promising play for investors and developers (especially with the higher-than-average yield).
