While rents continue their historic rise, I looked at local and regional changes to identify key trends and issues that may offer guidance for growth moving forward. The maps below explore 5-year rent changes, using metro New York City as a baseline for comparison. New York, once the hottest and priciest rental market, saw observed rent rise only 13% from 2017 to 2022, per the Zillow Observed Rent Index, likely due to rent control measures and major demand shifts. Nearly every metro area Zillow covers exceeded this growth rate. As a result, the rental market looks very different today than it did 5 years ago, with some striking regional differences that are worth highlighting.   

The top map shows 2017 rents by metro area, with the light green in each metro representing local rent and the white representing the gap between local rent and NYC rent. The more green the pie chart, the higher the local rent.

The bottom map shows 2022 rents, with the dark green representing the increase above NYC’s 13% growth. So the more dark green, the faster the local rent growth compared to NYC.

Some highlights:

·        Florida and Southern California really stand out as places with both extreme rent growth and high rents that are approaching – and in some cases exceeding – New York’s.

·        The Carolinas, Tennessee, Arizona and the Mountain West had robust rent growth the last 5 years, far exceeding New York, but average rents remain routinely around 50% - 60% of New York’s, suggesting there’s still room for price growth in these rapidly growing markets.

·        Much of the Rust Belt, Midwest, and Deep South had rents grow only slightly faster than New York’s as seen by their limited dark green additions. Low demand is a likely driver. However, parts of Ohio, Indiana, and Michigan had higher rent growth than nearby states, and not always due to population growth.

·        Texas’s metros were a mix of strong growth (Dallas, Austin, San Antonio) and very modest growth (Houston, McAllen, College Station), despite Texas’s strong population and employment growth. Supply is a likely driver here, though this finding still surprised me.

·        Overall, where 5 years ago there were a few counties with premium-priced rentals being the norm, now more and more counties are entering this premium-price range. Of the 101 counties with rent data, there are now 16 with average rents above $2,000/month, double the number in 2017. And there are now 57 counties with average rents above $1,500/month more than triple the 16 counties in 2017.