2024’s Most Expensive Metro Areas for Renters

How are current rent increases sustainable in our current economy?

Surprisingly, to some observers, household formations (increasing demand) stayed strong during COVID. The Joint Center for Housing Studies at Harvard (JCHS) has data on this in their recent annual update.

Also, moratoria on evictions and government stimulus funds kept many people in their apartments, so turnover of units was reduced. And then we have many years of underproducing housing relative to household growth. Data from the St. Louis Federal Reserve supports this conclusion.

What are three things renters can do to get the best deal when looking for a new apartment?

1. Research the market, which is relatively easy to do on the internet these days via sites like Zillow, Redfin, Apartments.com, and many others.

2. Work to improve their credit score.

3. Sign up for a longer-term lease if they can. This usually results in a lower monthly rent when a landlord can count on a tenant staying around.

What can local city and state governments do to alleviate the rent crisis and expand affordable housing in their cities?

Encourage production of housing of all kinds. Reduce regulatory obstacles, such as zoning, that limits the supply of land for apartments. Expedite environmental and other regulatory review of applications for new apartment development.

Is rent control good or bad for renters? Please explain.

Overall, most rent control — especially the most stringent versions — discourage additions to supply and investment in maintaining existing apartment supply.

It can have short-run benefits, but long run it tends to make housing less available and ultimately more expensive when supply is reduced relative to demand.

The other thing is that the folks who benefit from rent regulation are typically not the folks who have the lowest incomes.

What factors are contributing the most to the rent crisis? When, if at all, do you expect rent prices to return to normal (affordable) levels again?

Long-term failure to produce enough housing to meet the growth in households.

It’s unclear when the market will stabilize. It will take years of expanding supply and regulatory reform to encourage more housing development.

How are current rent increases sustainable in our current economy?

The rent increases that are being experienced across the country are the result of a few things that make up a perfect storm. Most are related to disruptions that grew out of COVID.

1. There were fewer housing starts during COVID, so the demand for units was not being met by supply.

2. Housing construction, maintenance, and related costs increased due to supply-chain disruptions and inflation in the economy.

3. Homeownership became more expensive (which pushed more people into the rental market) first because institutional investors were buying up homes and driving prices up and later because interest rates increased the cost of homeownership.

Now that COVID is ending, there is added pressure from landlords who want to raise rents since eviction moratoriums are over.

Moving forward, the main challenge will be for local areas to find ways to add rental units to the inventory, especially ones that are affordable. Without bringing new units on line, there will be continued pressure to increase rents.

What are three things renters can do to get the best deal when looking for a new apartment?

1. Renters should be willing to search for housing in a larger geographic area. For instance, if rents are too expensive in core cities or gentrifying areas, the willingness to relocate to surrounding communities may help renters find more affordable units.

2. Renters may also be able to negotiate lower rents, in the long term if they sign leases for longer terms. Basically, the longer they can lock in their rents, the more protection they receive from rent increases in the future.

3. If homeownership is an option (or goal) down the road, renters should look for the most affordable unit possible so they can save for a down payment faster. For those who plan to purchase a home in the future, mortgage costs (especially for comparable square footage) tend to be lower than renting.

What can local city and state governments do to alleviate the rent crisis and expand affordable housing in their cities?

Local and state governments can create incentives for developers to increase the inventory of affordable housing. That can be done with tax incentives, land-use reform, and other policies that encourage development, as well as by waiving things like deed and title fees.

Local and state governments can also lobby the federal government to expand things like the low-income housing tax credit (LIHTC) program and the housing choice voucher (HCV) program, in order to both increase the supply of housing and availability of subsidies for renters.

If the goal is to make homeownership more attainable, local and state government can also reduce property tax burden for primary residence with things like homestead tax exemptions and mortgage interest deductions.

Is rent control good or bad for renters? Please explain.

Rent control is generally good for renters. Today, places that have rent control usually place limits on rent increases, calibrating them to the cost of living. So, it protects renters from rent gauging.

Landlords generally oppose rent control, because it sets limits on how much they can profit. But, a tool like rent control is very beneficial in a hyper-inflated rental market like we see today.

What factors are contributing the most to the rent crisis? When, if at all, do you expect rent prices to return to normal (affordable) levels again?

My first answer gets at the first part of this question. In terms of returning to normal (affordable) levels again, it is unlikely that there will be a reduction in rents down the road.

What will make rents more affordable in the future will be if the rate of increases slows down to a pace that is in line with the cost of living and if household incomes increase in a relative sense to catch up with current rent levels.

State and local governments can do some things to ease pressures on rent increases. For lower-income households, the main source of rental assistance is the HCV program. It is underfunded now, but in the future, increasing subsidies for low-income renters and expanding that program would be an important step toward making housing more affordable.

What innovative rental housing trends have you observed recently and where?

There have been some small-scale efforts to create community land trusts to reduce the cost of housing. Also, some municipalities have used density bonuses and affordable housing ordinances to incentivize the construction of affordable housing.

What are your three best tips for families who are currently navigating the rental market?

1. Look for housing in a number of areas where you live. If you live in a part of a city or metropolitan area where rents are increasing and becoming unaffordable, you might find more affordable housing in a neighboring community.

2. If you are income-qualified, get on a waiting list for housing assistance. That will put you closer to the front of the line if your local housing agency gets additional funding.

3. If you find a unit, try to negotiate with the landlord for the best deal possible. You might be able to get a lower rent for a longer lease term or some other add-ons.

How are current rent increases sustainable in our current economy?

They really aren’t. Rent cannot increase past the renters’ ability to pay.

What are three things renters can do to get the best deal when looking for a new apartment?

1. Research the market.

2. Scour the ads.

3. Utilize all your connections, including friends, families, and workmates to see if they know of any vacancies coming up.

What can local city and state governments do to alleviate the rent crisis and expand affordable housing in their cities?

In the short term, not much, but in the longer term, they can expand the housing supply by having less restrictive land-use regulations. They can allow higher densities and more rental units to be built. They can use their leverage in planning decisions to promote more modest-income housing.

Is rent control good or bad for renters? Please explain.

It’s a mixed bag. [Rent control] tends to keep rents lower but reduces the supply of rental housing. And it tends to favor those already in rent-controlled housing who are not always the poorest.

Rather than controlling rents, it’s probably more effective to increase the supply of modest-income rental housing.

What factors are contributing the most to the rent crisis? When, if at all, do you expect rent prices to return to normal (affordable) levels again?

Restrictions on the increasing the supply of modest-priced rental housing.

Rents may remain high as a percentage of income for some time so that people can “afford” housing but have less disposable income. In the long term, the rent will be set by supply but perhaps at a higher price, so many may see a reduction in their disposable income.

What innovative rental housing trends have you observed recently and where?

Local governments directly and indirectly — through a mix of land-use policy and fiscal incentives — can increase the supply of modest-income housing.

What are your three best tips for families who are currently navigating the rental market?

1. Utilize all your social connections to help find a place.

2. See if you can access opportunities before they come onto the market.

3. Directly approach owners of rental units that you are interested in rather than waiting to apply for posted vacancies.

How are current rent increases sustainable in our current economy?

It is all a matter of demand and supply. As long as rental supply remains lower than demand growth, then there is no economic reason why rents could not continue growing. The rental market is, of course, impossible to disconnect from the ownership market.

The affordability crisis in the ownership market has pushed more and more people to rent, further increasing the demand for rental units. Policies that attempt to address this by controlling rent could further reduce rental supplying the future.

Another issue is, of course, the unequal access to affordable rental units. In many cases, as I have highlighted in a couple of research pieces, even the access to these rent-regulated units is not straightforward and unequally allocated.

What are three things renters can do to get the best deal when looking for a new apartment?

1. First of all, keep in mind that choosing where you live is associated with many other expenses. Getting a cheaper apartment that is farther away from where you work and requires you to drive every day and pay to park could seem like a good deal from just looking at the rent, but not when looking at the overall involved expenses.A holistic view of the related expenses and access to the neighborhood services will definitely determine how much of a good deal an apartment is for a specific household.
2. Second of all, in a situation where rents are increasing, scoring a long-term lease, even at slightly higher rates, could result in savings in the long run. Getting familiar with the rest of the session policies and whether the unit you are looking at gets that benefit is also very useful in this dimension.
3. Third of all, try to educate yourself about access to policies that could benefit you. There are several policies, like housing vouchers, that could help you even if your income is not necessarily too low, but you live in a very expensive area.

What can local city and state governments do to alleviate the rent crisis and expand affordable housing in their cities?

There is a long-run and a short-run solution. In the short-run, rate regulation and rental vouchers kind of alleviate the problem. In the long run, however, those could reduce the overall supply of rental housing, especially regulation, further increasing the rent.

Governments should aim at increasing the supply of all housing overall, as well as relaxing, after taking the necessary precautions, the regulations that prevent the transition of buildings from different uses. After the 2020 pandemic, in some areas, the demand for commercial square feet was reduced, especially office space. The careful transition of some of these buildings to residential could ease the rental affordability crisis.

Is rent control good or bad for renters? Please explain.

As mentioned above, rent control can definitely provide protection in the short run to current renters and prevent displacement. However, it could backfire in the long run.

As I mentioned, it reduces the incentives to build more rental housing. It also has the issue of unfair allocation if the people that we want to benefit the most, for example, low-income households, end up getting excluded from accessing these units.

What factors are contributing the most to the rent crisis? When, if at all, do you expect rent prices to return to normal (affordable) levels again?

There are many factors that are involved. Foreign demand in an increasingly globalized world could, for example, increase pressure on local rental prices. However, I think the slow supply of new units is the main culprit.

Why do we have a slow supply? I would say that strict regulations have had an important effect, as well as local movements of people who want to protect their home values and undertake political action to prevent new development. This is particularly acute in the US, where zoning regulations and project development approval are so decentralized.

Finally, since the great recession, there has been an increasing concentration in housing markets. Fewer and fewer developers have larger and larger market shares in the main cities in the country. The lack of competition has also been shown in some of my projects to be a cause for a reduction in supply and growth in prices.

I honestly do not see any current trends suggesting that any of these issues are being resolved, so I do not expect the affordability crisis to be resolved in the short run. Of course, the possibility of a recession could reduce people’s purchasing power, and reduce prices. However, lower prices when income is lower may result in similar levels of lack of affordability.

What innovative rental housing trends have you observed recently, and where?

Micro houses is an interesting one. Also, a growing trend of friends getting together to buy homes without having formed a household yet, at least in the traditional sense, is another one.

Then, we have the work-from-home trend that has allowed people to still benefit from having jobs in high-paying productive cities but moving their home locations to smaller, cheaper cities. All of these trends adapt to the impact of higher rents, but they’re not fully solving it.

What are your three best tips for families who are currently navigating the rental market?

1. Location is one of the most important decisions you can make for your family finances. Look at it holistically. As I mentioned before, lower rents could result in more overall expenses if they are associated with an apartment that gives you very little access to services.
2. Second, remember you will be substituting internal apartment services for external services in some cases. In this sense, you may not be able to have a garden in an apartment, but its location could give you access to a public park that could give you, at least partially, some of the services. Again do not think about the unit and its location as separate decisions from other aspects of your life.
3. Third, do not rule out renting as a useful option for your family, especially if it allows you more flexibility and some buffer until the time comes when home prices go down again.