In this article, we will be analyzing the US rental market while covering the 20 most affordable US cities for renters. If you wish to skip our detailed analysis, you can move directly to the 5 Most Affordable US Cities for Renters.
The US Rental Market at a Glance
As 2024 commenced, the rental market in the US seems to have cooled. However, a shortage of supply and high demand from renters continue to persist. During January, the national median price of rent for apartments declined by 0.3% year-over-year. On February 22, CNN reported that the demand will continue to be strong since renting is still affordable as compared to buying a house, especially for many would-be buyers who were pushed out of the market during the national housing crisis. You can also take a look at the best states for first-time homebuyers.
Rents have grown in the Midwest where rental demand is high since unemployment rates are low. The median rent has fallen in the South due to the growing supply of new multifamily housing. Rents in the West have also gone up influenced by the high demand and issues related to affording a new house. Metros in the Northeast such as New York and Boston have faced a surge in rents since building new apartments is relatively difficult amidst strong labor markets.
Current Market Dynamics
As reported by Zillow, the income currently required to afford a typical rental in the US is $78,379 and rents are 3.5% higher, as compared to 2023. As of February, apartment rents have gone up by 23.6% since the global pandemic first came. As the US millennial generation approaches the age for buying a home, single-family rents have also witnessed a rise twice that for apartment rents.
Metro-wise, 47 of the 50 largest metro areas saw an increase in rents in February since last year. Providence, Cleveland, Louisville, Hartford, and Cincinnati recorded the highest annual rent increases. At the same time, asking rents went down month-over-month in Milwaukee by 0.4%, Austin by 0.2% and Dallas by 0.2%. Expensive US cities for renters have been previously covered.
As of February, single-family rents increased year-over-year in 49 of the 50 largest metro areas. Some of these include Cleveland, Cincinnati, and Milwaukee. Multifamily rents also went up on a yearly basis in 39 of the 50 largest metro areas including Providence, Louisville, and Hartford.
State Wise Analysis
As reported by CNBC, housing is a major household expense for many Americans. A notable trend in the state rental market reflects that states with the highest rent costs are those where mortgage costs are high. Among all states, Hawaii holds the highest average monthly rent. The average cost of household bills also tends to be high in the state. Rents are high in the US states of California and Massachusetts as well. Residents of California pay an average monthly rent as high as $1,927. On the other extreme, West Virginia was found to have the lowest rent costs. Furthermore, the state is relatively affordable in terms of mortgage payments. West Virginia’s average cost of bills which included rent, tends to be 25.2% lower than the national average. Arkansas and South Dakota are other US states where the average monthly rent is relatively cheaper.
The Homebuilding Industry Amid a Rebound
The rental market in the US might take some time to fully rebound. The crisis of many remains the same. Those who wish to buy a house might consider renting one unless the market is stable, house prices are low, and the supply in the market is enough to cater to the rising demand. Americans looking to settle in some of the most desirable locations across the country can consider exploring options offered by KB Home (NYSE:KBH), Lennar Corporation (NYSE:LEN), and LGI Homes, Inc. (NASDAQ:LGIH). Let’s take a look at what these homebuilders have been up to.
KB Home (NYSE:KBH) aims to build personal relationships with customers by building each home uniquely. The homebuilder has constructed more than 680,000 quality homes in its history. On March 15, KB Home (NYSE:KBH) reported the grand opening of its new home community in Jacksonville, Florida. The community ‘Hawkes Meadow’ offers a short commute to River City Marketplace and downtown Jacksonville. Jacksonville International Airport and major employers in the area can also be accessed. Pricing for new homes starts from the $280,000s.
Lennar Corporation (NYSE:LEN) constructs affordable, move-up, and active adult homes in the US. Additionally, the company develops high-quality multifamily rental properties. On March 12, the company reported the initiation of sales in its new community in Plant City, Florida. The new single-family, master-planned community ‘Park East’ allows convenient access to major highways and the BayCare South Baptist Hospital. Prices for the Park East homes from Lennar Corporation (NYSE:LEN) start in the low $300,000s.
LGI Homes, Inc. (NASDAQ:LGIH) is a leading American homebuilder. The company has closed more than 65,000 homes since it was founded. On March 4, LGI Homes, Inc. (NASDAQ:LGIH) reported that the company’s luxury brand Terrata Homes has initiated the sales of homes in its new community in Seattle. The community ‘Skyway Village’ offers family-friendly amenities including a children’s playground, open green spaces, and a half-court basketball court. Residents can visit Renton, Bellevue, and downtown Seattle with ease while staying in the community. While move-in-ready opportunities are available, new homes in the community are priced from the $970,000s.
Now that we have analyzed the US rental market and real estate options, we can move to the 20 most affordable US cities for renters.
20 Most Affordable US Cities for Renters
Our Methodology:
In order to compile a list of the 20 most affordable US cities for renters, we acquired the latest data on the rental market from Zillow, a leading real-estate source. We sourced the typical rents for apartments in cities from Zillow’s Rental Market Report for February 2024. Hence, we ranked the US cities with the lowest average rents in descending order of their rents, as of February 2024.
20 Most Affordable US Cities for Renters
20. Salt Lake City, Utah
Typical Rent: $1,656
Salt Lake City is the capital of Utah and is one of the most affordable rental markets in the US. As of February, the city has a typical rent of $1,656. This rent has experienced a year-over-year growth of 1.6%.
19. Houston, Texas
Typical Rent: $1,649
Houston is situated in Southeast Texas. The city tends to be affordable in terms of rent since the typical rent was last recorded at $1,649 in February. The typical rent has gone up by 2.3% year-over-year.
18. New Orleans, Louisiana
Typical Rent: $1,619
New Orleans is positioned in the southeastern region of the state of Louisiana. As of February, the typical rent in New Orleans is $1,619 which is relatively cheap. Hence, New Orleans is one of the most affordable US cities for renters.
17. Richmond, Virginia
Typical Rent: $1,616
Renters in the US can also consider Richmond. The city lies at the James River’s fall line. As of February, Richmond records a typical rent of $1,616 which deems the market affordable for renters.
16. Minneapolis, Minnesota
Typical Rent: $1,615
While witnessing a year-over-year growth of 2.9%, the typical rent in Minneapolis was recorded at $1,615 in February. Hence, the city ranks among the 20 most affordable US cities for renters.
15. Indianapolis, Indiana
Typical Rent: $1,497
Indianapolis is situated in Central Indiana and ranks among the most affordable US markets for renters. The typical rent in the city was last recorded at $1,497 in February. This rent grew by 5% year-over-year.
14. Cincinnati, Ohio
Typical Rent: $1,488
Hamilton County in Ohio hosts the US city of Cincinnati. The city is a cheap market for renters. This is evident from the fact that the city recorded a typical rent of $1,488 in February.
13. Columbus, Ohio
Typical Rent: $1,452
Colombus serves as the capital of the US state of Ohio. As of February, the city records a typical rent of $1,452. The year-over-year growth in this rent was reported to be 4.9%.
12. Memphis, Tennessee
Typical Rent: $1,444
The city of Memphis is positioned along the Mississippi River. The typical rent in the city is $1,444 as recorded in February. Therefore, Memphis is another affordable city for renters in the United States.
11. San Antonio, Texas
Typical Rent: $1,428
San Antonio is a populous city based in Texas. The city offers a typical rent of $1,428 which ranks it among the cheapest US markets for renters.
10. Kansas City, Missouri
Typical Rent: $1,412
Kansas City ranks as another affordable market for US renters. The city records a typical rent of $1,412, as of February. This rent increased by 6.30% year-over-year.
9. Pittsburgh, Pennsylvania
Typical Rent: $1,401
The typical rent in Pittsburgh was recorded at $1,401 in February. Although this rent grew by 4.8% year-over-year, it is relatively affordable for renters.
8. Detroit, Michigan
Typical Rent: $1,381
The 20 most affordable US cities for renters rank Detroit as well. As of February, the city boasts a typical rent of $1,381. The year-over-year growth in this rent was reported to be 4.00%.
7. Birmingham, Alabama
Typical Rent: $1,376
Birmingham is located in the north-central region of Alabama. The city ranks as one of the most affordable US cities for renters. The typical rent in the city is $1,376 as recorded in February.
6. Cleveland, Ohio
Typical Rent: $1,363
Cleveland is a city based in Northeast Ohio which tends to be affordable for renters. According to Zillow, the city has a typical rent of $1,363 as recorded in February.
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Disclosure: None. 20 Most Affordable US Cities for Renters is originally published on Insider Monkey.