Checking the classifieds: Rental market in the US tightens

Rental prices for a single room in London reached a record high in the first quarter of this year – Copyright AFP/File Susannah Ireland

Those hoping for a smoother renting journey in 2024 may need to adjust their expectations. Considering the high lease renewal rates during this peak season (the time of year when prices are usually at their highest), along with the 94 percent occupancy and a slower pace of construction, the rental market seems very tight. 

In terms of where growth is the greatest there has been a shift away from coastal cities. Instead so-termed ‘Chicagoland’ is now neck-and-neck with Miami as the biggest rental markets in the U.S.

Both appeal to younger people. Almost half of U.S. renters are under the age of 30. Renting is most common in dense urban areas, which are characterised by competitive real estate markets. 

These findings are according to the company RentCafe, who has released the Rental Competitiveness Report. Central to the report is a significant shift in the national rental landscape. 

The report reveals that more renters are choosing to stay put, with the lease renewal rate rising to 62 percent (up from 60 percent in peak season 2023). Additionally, fewer available units and strong demand are keeping the occupancy rate at a high 93.7 percent (a marginal 0.3 percent decrease from 2023).  
 

These limited options mean a high number of applicants for each vacant apartment: The number of prospective renters per apartment has barely shifted, dropping from 10 to 9 since last year. 
 

A consequence of the quick turnaround on vacant units provides less time for decision-making, as the average number of vacant days for an apartment increased to 39 (just 2 days up from 37 last year). 
 

In terms of future growth, the share of new apartments has dropped from 0.86 percent last year to 0.65 percent this peak season, slowing the addition of modern rentals and leaving renters with fewer options to choose from. 
 

Based on these metrics, RentCafe calculated a Rental Competitiveness Index (RCI) of 75.8 for the peak moving season, up from 69.4 in 2023, indicating a more competitive U.S. rental market. 

This is in the context of each rental market (there are 137 presented in the overall report)having its own unique dynamic.