Rents are growing fastest in unexpected places, led by Hartford and Cleveland
New data from Zillow reveals that while rents remain highest in large coastal markets like New York City, San Francisco, and Boston, the fastest-growing rents are in smaller Northeast and Midwest markets, with Hartford and Cleveland leading the way.
Hartford's rents have surged 7.8% year-over-year, followed by Cleveland at 7.2% and Louisville at 6.8%. Nationally, rents have increased by 3.5% from last year, marking the fastest annual growth since July 2023.
The typical rent in New York City stands at $3,472, with Manhattan's median asking rent at $4,400. San Jose and Boston also feature high typical rents at $3,429 and $3,127, respectively.
These trends are influenced by remote and hybrid work models, which allow renters to opt for more affordable areas, despite occasional commutes to larger cities.
- Hartford's rent growth leads major markets with a 7.8% increase year-over-year.
- National rents have risen 3.5% year-over-year, the fastest annual growth since July 2023.
- Los Angeles may join the list of markets with rents exceeding $3,000 if current growth trends continue.
Insights
The rapid increase in rents in secondary markets such as Hartford and Cleveland can be indicative of shifting economic and demographic trends. Historically, these cities have not been rental hotspots, but the surge demonstrates a significant shift driven by remote work and economic considerations.
Short-term, this trend suggests potential for quick returns on real estate investments in these markets. Investors might see increasing rental yields as demand rises. However, there is also the risk of these markets becoming less attractive if rent hikes outpace wage growth, leading to affordability issues.
In the long-term, these shifts can alter the dynamics of the real estate market, potentially leading to more balanced demand across various regions. This could lessen the pressure on traditionally expensive coastal cities, possibly stabilizing their rental rates.
The increase in rental prices in markets like Hartford and Cleveland highlights a broader trend of migration patterns influenced by remote work. Commuting flexibility has reduced the need to live in proximity to major urban centers, allowing people to seek more affordable living options.
This data is valuable for retail investors as it indicates where future demand for rental properties might grow. Investors need to be aware of the sustainability of this trend. If remote work remains prevalent, these markets will likely continue to see higher demand and rental growth. However, any shift back to traditional office-centric work could reverse these trends.
Additionally, the combined factors of increased rental prices and potential new developments in these areas could lead to economic revitalization, further supporting long-term investment potential.
Rents are still most expensive in large coastal markets, but they are growing fastest in smaller markets in the Northeast and Midwest
New York ,San Jose andBoston are the most expensive rental markets.- The fastest-growing rents are in more affordable markets in the Northeast and Midwest, led by
Hartford and Cleveland. - Nationally, rents are up
3.5% year over year, the fastest annual growth since last July.
"More people move during the summer, which causes the rental market to heat up," said Skylar Olsen, chief economist at Zillow. "Renters are being drawn to more affordable areas within the Northeast and Midwest. Commuting into
Rents have grown
The typical rent eclipses
Nationally, the typical rent is
Metropolitan Area* | Typical Rent (Zillow | ZORI Month over | ZORI Year over Year |
0.5 % | 3.5 % | ||
0.9 % | 3.8 % | ||
0.5 % | 2.7 % | ||
0.9 % | 5.0 % | ||
0.4 % | 0.2 % | ||
0.6 % | 2.2 % | ||
0.8 % | 5.0 % | ||
0.5 % | 4.0 % | ||
0.2 % | 2.4 % | ||
0.4 % | 0.9 % | ||
0.5 % | 4.6 % | ||
0.0 % | 1.1 % | ||
0.5 % | 1.6 % | ||
0.2 % | 3.0 % | ||
0.6 % | 5.2 % | ||
0.7 % | 3.9 % | ||
0.3 % | 3.0 % | ||
0.6 % | 1.8 % | ||
0.1 % | 1.5 % | ||
0.4 % | 2.4 % | ||
0.8 % | 3.4 % | ||
0.8 % | 4.9 % | ||
0.5 % | 1.1 % | ||
0.7 % | 1.2 % | ||
0.2 % | -0.1 % | ||
0.9 % | 2.6 % | ||
0.4 % | 3.7 % | ||
1.0 % | 4.4 % | ||
0.6 % | 5.2 % | ||
0.2 % | -3.0 % | ||
0.7 % | 3.0 % | ||
0.8 % | 5.5 % | ||
1.2 % | 4.7 % | ||
0.4 % | 4.0 % | ||
1.1 % | 7.2 % | ||
1.0 % | 3.0 % | ||
0.6 % | 1.2 % | ||
0.6 % | 5.3 % | ||
0.5 % | 6.3 % | ||
0.1 % | 0.8 % | ||
0.6 % | 5.7 % | ||
0.7 % | 3.1 % | ||
0.6 % | 0.4 % | ||
0.5 % | 2.7 % | ||
1.2 % | 5.4 % | ||
0.6 % | 6.8 % | ||
0.3 % | 2.9 % | ||
0.8 % | 1.9 % | ||
1.1 % | 7.8 % | ||
0.2 % | 5.4 % | ||
0.5 % | 3.1 % |
*Table ordered by market size
About Zillow Group
Zillow Group, Inc. (Nasdaq: Z and ZG) is reimagining real estate to make home a reality for more and more people. As the most visited real estate website in
Zillow Group's affiliates, subsidiaries and brands include Zillow®, Zillow Premier Agent®, Zillow Home Loans℠, Trulia®, Out East®, StreetEasy®, HotPads®, ShowingTime+℠, Spruce® and Follow Up Boss®.
All marks herein are owned by MFTB Holdco, Inc., a Zillow affiliate. Zillow Home Loans, LLC is an Equal Housing Lender, NMLS #10287 (www.nmlsconsumeraccess.org). © 20234 MFTB Holdco, Inc., a Zillow affiliate.
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SOURCE Zillow
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