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Where are rents rising fastest in the US?

Deni and Brian break down the data on the ten US cities where rents rose the fastest in 2021. The data included medium and large cities, not small towns.

With each city, we also cover how quickly home prices rose there in 2021, along with median rents and median real estate values.

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live off rents podcast transcript

Deni: Hi, everyone. Welcome to Spark Rental Facebook Live and podcast. I was just telling Brian, I’m a little flustered because my computer upgraded to Windows 11 without my permission. And everything’s all over the place. So anyway, glad you’re all here. Let us know where you are tuning in from. And as always, if you have any questions, even if it’s not this topic, just put them in the chat and we’ll talk about them. Last week I was away, and Brian talked to Doug Harvey, and I watched a good bit of that, and it was quite interesting. I mean, even with the tech issues and whatnot. And we talked about mobile homes. By purchasing and whatnot, which is kind of interesting to me. And this week we’re going to be talking about where rents are rising fastest. Besides everywhere? Just kidding. So, Brian, with that, go ahead and let us know. I know we’re going to go over the actual ten cities. But give us a little overview.

 

Brian: Sure. So, rents are way up in 2021 or were rather past tense since we’re now in 2022. But nationwide, rents rose at an average of close to 14 percent in 2021. Rose an average of 13.89% nationwide. Now that is not evenly distributed, there are some places in the country where rents went down. There are other places in the country where rents skyrocketed upward. You know, in the city where rents screw the fastest, which we’ll go over in a minute, they went up almost 30 percent in a single year. Now that if that gets you all excited as a real estate investor or super upset as a renter. Bear in mind that home prices actually grew even faster, so it’s actually not a good thing for either home buyers or real estate investors.

 

Deni: What I’m also seeing in my area, you would think the rents raise that much. There would be less tenants or whatnot, but it’s kind of crazy here. Like rentals are going so fast.

 

Brian: It’s a hot rental market right now. You know, low vacancy rates, there’s more demand than there is supply. Yeah, the same thing is going on the buying side of the market. There’s just not enough housing supply right now. So yeah, let’s jump right in. we’re going to be talking today about the 10 cities where rents grew the fastest in 2021. Now these are all medium to large cities. These are not small towns. This is based on the 100 largest cities in the U.S. So, there are going to be some small towns across the country where rents grew even faster. But those are not included in this data set. This is really just medium size and major cities across the U.S. So, without further ado, the tenth fastest rent hiking city in the country in 2021 was Atlanta, Georgia, where the median rent as of December 31st was 1902 dollars. Rents grew by 21.15 percent year over year.

 

Deni: When you’re seeing median rent, is that by any chance Per like one-bedroom, two-bedroom.

 

Brian: That’s all. That’s across the board.

 

Deni: Across the board. Ok, yeah.

 

Brian: Yeah, that includes apartments and single-family rentals. Median rent about nineteen hundred dollars. The median home price was around $340000 – $338000. Yeah, so rents in Atlanta shot up over 21 percent in 2021. Number nine on the list is Killeen, Texas, where the rent at the median rent is thirteen hundred and sixteen dollars. As of the end of twenty-one, rents there grew over twenty twenty-one by twenty-one point eighty five percent. The median home price there is around two hundred and twenty-four thousand dollars. So, yeah, by the way, we will talk a little bit about gross rent multipliers here. Gross rent multiplier is just the median price divided by the median rent. The lower the GRM, the gross rent multiplier, the better of a deal it is for real estate investors and landlords. So, the GRM in Atlanta is fourteen point eight two. It’s kind of a medium to high. The GRM and Killeen, Texas, is fourteen point one nine, also kind of medium to high. But yeah, in Killeen, Texas, rents grew almost twenty two percent over last year. Number eight Jacksonville, Florida, where they median rent of seventeen hundred and twenty-seven dollars. Rents grew in Jacksonville at a pace of twenty-two-point one four percent, so a little over twenty two percent. Median home prices are three hundred and twenty-one thousand dollars. They grew at a pace of almost 28 percent over the course of the year. GRM there is fifteen and a half fifteen point five one. So again, not great numbers for investors. Number seven is Austin, Texas, which we’ve all heard a lot about over the last. A few years in the real estate world, median rent, there is $1801. Those rents went up 22.27 percent over the last year and crazily enough home prices doubled that pace. Home prices went up 44.56 percent, almost forty-five percent.

 

Deni: That’s crazy.

 

Brian: Absolutely nuts. The median home price in Austin is almost $550000. It’s five hundred and forty-six thousand.

 

Deni: So, I have a niece out there and we’re going to a wedding out there in a couple of weeks and they bought a house before all this happened, so they got in right before.

 

Brian: But it’s a bad market for landlords. The GRM is crazy high. It’s over 25, so it doesn’t really make sense to buy there from a landlord perspective, from a cash flow perspective. But yeah, rents in Austin up over 22 percent year over year. All right. Number six on the list is Las Vegas. Median rent in Vegas is 1809 dollars. Rents there grew almost 25 percent for the year twenty-four-point six seven percent. Median home price in Las Vegas is three hundred and ninety-six thousand thereabouts. It’s three hundred ninety-five nine hundred and forty-three. Not that we need to nitpick again. The grm there is not favorable for landlords and investors. It’s high. It’s over 18. It’s 18.24. Home prices in Vegas grew almost 27 percent. Last year, they grew 26.82 percent. So, yeah, I mean, for almost every one of these cities, home prices are going up way faster than rents as quickly as rents are rising. Number five on the list is Miami/Fort Lauderdale. They are grouped together in this data set. So median rent in Miami and Fort Lauderdale is twenty-five hundred and thirteen dollars. Rents there grew again almost 25 percent last year, twenty-four point seven one percent. That is the only city on this list where home prices actually grew slower than rents. So, home prices grew twenty two point three percent last year. Median home price in Miami/Fort Lauderdale is close to three hundred ninety-eight thousand dollars, so not cheap. Actually, has the best GRM of any city on this list at thirteen point two. It’s still not fantastic for investors, but better than the others on the list. Number four on the list is Phoenix, Arizona.

 

Brian: Rents there grew over 25 percent for the year is 25.25 percent. Median rent is eighteen hundred and eighty-five dollars. Median home price is over four hundred and twenty-eight. Oh, I’m sorry, four hundred twenty-seven thousand dollars. Home prices in Phoenix grew almost 32 percent last year, just crazy fast. The GRM there is almost 19 very high not favorable for investors. Number three on the list TAMPA, Florida Median rent is nineteen hundred and eighty-nine dollars. Rents there grew twenty-six-point six percent over the last year, just crazy fast. Home prices grew even faster at twenty-nine-point seven percent, and the median home price in Tampa is 327, actually three hundred twenty-eight thousand dollars. Rounding up. GRM, there is a little bit more favorable to investors and landlords that thirteen point seven. Still not great. All right. Number two on the list is Fort Myers, Florida. Rents there grew at twenty-seven-point five percent last year. Blazing fast home prices grew even faster at thirty-five-point eight percent. Median home price in Fort Myers is three hundred and fifty-one thousand. And if I didn’t say already, the median rent there is 1802 dollars. It’s a high GRM at over 15 and a half. So, buyer beware. As an investor. And then finally, the place the city in the U.S., where rents grew the fastest in 2021 is Northport/Sarasota/Bradenton, Florida. They grew there almost 30 percent. It was twenty-nine point eight seven percent in last year, 2021. Home prices are even faster. Thirty-seven and a half percent, the median rent in that market is twenty-two hundred. Median home price is around $410000. So, yeah, these are not friendly.

 

Deni: Florida!

 

Brian: The top three on the list are all in Florida, and there are several others on the list. In Florida as well, so five out of the top 10 cities where rents grew the fastest in 2021 are in Florida and all three of the top three are in Florida. Rents been going up in Florida. But you know, again, home prices growing even faster. So as a landlord or rental investor, you’re paying more for less rent basically, because prices are going up faster than rents. So, your cash flow is going to be going down in any of these cities, but really across the country because nationwide average home prices grew significantly faster than rents in 2021. Major cities, you know, as a general rule, major cities tend to have high gross rent multipliers and low cap rates, which makes them not great for rental investing. You really you can do better by finding smaller cities and smaller towns to invest in rentals, you’ll find a better price to rent ratios there.

 

Deni: Would you say the more rural I was just having this discussion with some more rural things will be but then you got to think, is there as many available renters?

 

Brian: Yeah. Gross rent multipliers and cap rates can be better in rural areas like you said, you can have other challenges. Does a landlord there, you know, you can have just not enough demand for the housing there? Homeownership rates tend to be higher in rural areas as well. That can mess up the cap rates and the GRM. So, you know, small cities, small towns tend to be ideal for rental investing. Major cities tend to be a total mess and not just because of the low cap rates and the high grams. They also tend to have extremely anti-landlord laws. The regulations are very tenant friendly. So, you know, we usually recommend that you avoid buying rental properties in major cities. Stick with the smaller cities, smaller towns where you can find better deals, better cash flow and fewer anti-labor landlord laws.

 

Deni: Anti-labor landlord-tenant laws.

 

Brian: Yes! And on that note, you can also, the real estate is just cheaper in smaller towns and smaller cities. So, we have an interactive map that will share here in the comments, where you can find the cheapest real estate in the U.S. among cities and towns. So, if you are looking for more affordable real estate, you can check out that list. Yeah, the list is available for download. There’s also an interactive map there, so check that out. It’s the top 100 cheapest cities in the country, and they range in price from around $35000 Median home prices up to like, I don’t know, one 15 ish. So, it’s going to take a look at.

 

Deni: That’s crazy. I mean, thirty-five to one fifteen and here we’re talking three to four hundred.

 

Brian: Yeah, as attractive as it sounds, you know, these cities where rents are going up, really high prices are going up even faster. So be aware of that as a real estate investor. Deni, is there anything else you want to go over before we call this episode complete?

 

Deni: No, I don’t think so. And if nobody has any questions, everybody is probably just falling off their seats.

 

Brian: All right. Well, we will see you guys’ next Tuesday at 2:00 p.m. Eastern, 11:00 a.m. Pacific. Have a great week and stay in touch. Let us know what you want to hear about moving forward. We are all ears.

 

Deni: Have a great day!

 

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