10 Large Cities with Most Explosive Rent Growth in 2019

One of the most important factors used to evaluate a potential target investment market is supply and demand.

The demand side of the equation is measured in part by the change in median rent year-over-year – an increase in median rent indicates an increase in the demand for rental properties in a particular area, and vice versa.

Ideally, the change in rent for your target market is positive (obviously) and is greater than the average national change in rent. From January 2019 to January 2020, the average national change in rent was +1.6% (compared to +1.6% and +2.6% over the same time period in 2018 and 2017 respectively). This would indicate that rent growth is continuing to be sluggish on a national scale compared to previous years. However, the top markets in the country are continuing to outpace the current and past two year averages.

Overall, 217 of the 712 US cities experienced rent growth of 2% of more. 96 had rent growth of 3% or more. 36 had rent growth of 4% of more. And 12 had rent growth of 5% or more. The city with the greatest rent growth was the city of Madison in Alabama (population of 47,959) – 6.9%.

Here are the top 10 large US cities where rents increased the most from January 2019 to January 2020:

National Averages

• Median 1 BR Rent: $962
• Median 2 BR Rent: $1,193
• Y/Y Change: 1.6%

10. Arlington, TX

Loews Hotels

• Median 1 BR Rent: $1,016
• Median 2 BR Rent: $1,262
• Y/Y Change: 2.6%

9. Plano, TX

NCTCOG.org

• Median 1 BR Rent: $1,186
• Median 2 BR Rent: $1,474
• Y/Y Change: 2.8%

8. Stockton, CA

Downtown Stockton Alliance

• Median 1 BR Rent: $994
• Median 2 BR Rent: $1,304
• Y/Y Change: 2.8%

7. Las Vegas, NV

Destination360

• Median 1 BR Rent: $963
• Median 2 BR Rent: $1,193
• Y/Y Change: 3.2%

6. Austin, TX

Visit Austin

• Median 1 BR Rent: $1,191
• Median 2 BR Rent: $1,470
• Y/Y Change: 3.3%

5. Nashville, TN

Andrew Jackson’s Hermitage 

• Median 1 BR Rent: $947
• Median 2 BR Rent: $1,163
• Y/Y Change: 3.3%

4. Colorado Springs, CO

DowntownCS.com

• Median 1 BR Rent: $986
• Median 2 BR Rent: $1,272
• Y/Y Change: 3.3%

3. Phoenix, AZ

TripSavvy

• Median 1 BR Rent: $883
• Median 2 BR Rent: $1,101
• Y/Y Change: 3.7%

2. Henderson, NV

Wikipedia

• Median 1 BR Rent: $1,127
• Median 2 BR Rent: $1,397
• Y/Y Change: 4.2%

1. Mesa, AZ

• Median 1 BR Rent: $915
• Median 2 BR Rent: $1,140
• Y/Y Change: 5.1%

If you are investing in one of these markets, do not assume that the future rent growth will be the same. Always conservatively estimate the annual income growth factor – 2% to 3% maximum. That way, if the rental rates slow, you’ll still hit your projections. And if the rental rates continue or increase, you’ll exceed your projections, which means more money for you and your investors.

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Disclaimer: The views and opinions expressed in this blog post are provided for informational purposes only, and should not be construed as an offer to buy or sell any securities or to make or consider any investment or course of action