In light of the current surge in the number of prospective tenants, a new Realtor.com report titled “Top 10 Markets for Renters” indicates that cities in the Midwest and South rank highest for availability, affordability, and economic growth as well as for having commute times that are shorter than average. These attributes make these regions attractive to individuals looking for opportunity as well as a high standard of living.
With a high rental vacancy rate of 9.0% and a rent-to-income ratio of 19.7%, Austin, Texas, emerged as the top city, offering excellent affordability and availability for tenants. Second place went to Oklahoma City, then Birmingham, AL, San Antonio, and Minneapolis. These top cities are all seeing economic growth, which is drawing many of young professionals. The top rental markets for college graduates in 2024 were also identified as Austin (ranked first) and Raleigh (ranked ninth).
The Top 10 Most Affordable Rental Market Cities/Towns:
- Austin, Texas
- Oklahoma City
- Birmingham, AL
- San Antonio
- Minneapolis
- Sandy Springs, GA
- Nashville, TN
- Kansas City, KS
- Raleigh, NC
- Norfolk, VA
“Over the last year, we continued to see strong demand for rental properties, especially among younger generations prioritizing the benefits of renting, like flexibility and relative affordability, while home prices and mortgage rates remain high,” said Danielle Hale, Chief Economist at Realtor.com. “Despite high demand, there are some bright spots in the rental market around the U.S. in cities and towns that offer renters good job opportunities, a decent commute, flexible lease terms, maintenance free amenities, and more rental options to choose from at relatively affordable prices.”
Denver leads the West in rental markets, while no city in the Northeast or West made the top 10. However, both of these markets ranked below the top 10 due to their low rental vacancy rates and relatively low rental affordability. The top rental market in the Northeast is Lawrence, Massachusetts, located in the Boston metro area.
Which Cities Rank Highest When It Comes to Affordable Rent?
The percentage of income allocated to housing is displayed by the median rent to family income ratio. Lower is preferable because it usually indicates that households have more money to spend on other necessities. The top markets are concentrated in metropolitan regions with average rent-to-income ratios of 21.0%, which indicates that, on average, rentals accounted for 21% of the income of a typical household.
Generally speaking, housing costs should not account for more than 30% of a household’s overall income. For example, the rent-to-income ratio in the top 10 markets varied from a low of 17.7% in Oklahoma City to 23.8% in Nashville, TN.
The Top 10 Most Affordable Rental Market Metros:
- Austin-Round Rock, TX
- Oklahoma City
- Birmingham-Hoover, AL
- San Antonio-New Braunfels, Texas
- Minneapolis-St.Paul-Bloomington, MN-WI
- Atlanta-Sandy Springs-Alpharetta, GA
- Nashville-Davidson-Murfreesboro- Franklin,TN
- Kansas City, MO-KS
- Raleigh, NC
- Virginia Beach-Norfolk-Newport News, VA-NC
More Rental Vacancies? More Options for Renters!
A good rental vacancy rate is a common characteristic shared by the top 10 markets. Renters in these places may have more negotiation leverage with landlords because they have more rental options to select from.
Together, the top markets are found in metro areas with an average rental vacancy rate of 8.8%, which is higher than the metro average of 6.9% and the town/city average of 6.4%.
The rental vacancy rate in the top 10 markets is 5.2% to 12.3%. Norfolk, VA (5.2%) has the lowest rental vacancy rate, while Birmingham, AL (12.3%) has the highest. Further, two Southern metro areas that rank highly for rental availability include Nashville, TN (9.2%), and Austin, Texas (9.0%).
The spike in new multi-family development and completion in the Midwest and South, which increased the total rental inventory, may be a significant factor in explaining the higher vacancy rates in the top markets.
Economic Opportunities Lead to More Opportunities
A lower than expected unemployment rate suggests improved job stability for renters by implying less competition for available positions. The top 10 markets are concentrated in metro areas with average projected unemployment rates for 2024 of 3.3%, which is less than the average expected for towns and cities of 4.0%. The lowest unemployment rates in the top 10 markets were 2.9% in Nashville and Minneapolis, and the highest rates were 3.5% in Birmingham, AL, and San Antonio.
Apart from a plethora of rental possibilities and reasonably priced rents, these top markets also provide advantages that could improve their standard of living. For instance, shorter commutes are advantageous for many tenants in our top 10 markets. The best cities on our list have an average predicted commute time of 25 minutes in 2024; for a commuter who travels five days a week, this may mean a possible annual savings of 43 hours. The top towns and cities had average commutes that ranged from a high of 27 minutes in Sandy Springs, GA, to a low of 24 minutes in Oklahoma City, Birmingham, AL, Minneapolis, and Kansas City, KS.
To read the full report, including more data, charts, and methodology, click here.
