Best and Worst Cities for Renters
The population of New Haven, Conn., grew a robust 5% from 2000 to 2010. With demand for housing outpacing construction of new multi-family buildings over the past few years, the home of Yale University is a great place to be a landlord. But, by our measure, it’s the worst city in the country to be a renter.
With a low rental vacancy rate of 4.5%, average rent in New Haven is up $57 over last year to $1,504 per month, exceeded only by notoriously pricey markets like New York City, San Francisco and Boston. It would actually be cheaper for residents of the Elm City to buy: The median price of a single-family home is $223,672; at 10% down with a 30-year mortgage at 4.9%, that would translate into monthly mortgage payments of $1,435 per month, $69 less than the average rent.
Hessam Nadji, managing director of research and advisory services at Marcus and Millichap, says job growth in nearby Westchester County and New York City contribute to New Haven’s high rents, as does the academia-driven local economy: “Students and employees at Yale University provide a sizable pool of potential renters…[and] medical facilities associated with Yale also augment the renter pool.”
On the flipside, rental bargains can be found in many of the cities rocked by the real estate bust. No. 1 on our list: Tucson, Ariz., where the average monthly rent is just $604, only $9 higher than in 2010. Unsold, vacant homes have flooded the Tucson rental market, translating into more choices and reasonable rents for locals happy to stay away from an uncertain home market.
Behind The Numbers
With the help of Marcus and Millichap, an Encino, Calif.-based real estate investment firm, we rated the 44 biggest cities in the U.S. based on four criteria: Average rent in the first quarter and how much it changed year-over-year; vacancy rates, since more empty units mean more choices and usually better prices; and lastly the cost of renting versus buying.
From the peak of the housing bubble through the bust, the Joint Center for Housing Studies at Harvard University reports that 3.9 million Americans have transitioned to renting since 2004. The national rental vacancy rate has declined by nearly a percentage point year-over-year. Nadji says the growing demand for rentals is a departure from the usual pattern in the housing market during downturns: “Normally you don’t get very strong rental demand until there’s job demand and this time around we’ve seen it ahead of job growth. A big part of it is the big problems in the for-sale single-family housing market.”
No matter where you live, putting more time and effort into your hunt can help you uncover deals. Christina Aragon, director of strategy and consumer insights at Rent.com, a Santa Monica, Calif.-based rental listing site, says offering to sign a 15- to 18-month lease rather than the traditional 12-month contract can go far in price negotiations no matter what the market.
Here are the nation's five best cities for renters:
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| Among the best cities for renters: Kansas City, MO. Photo: AP Photo/Orlin Wagner |
No. 5: Kansas City, Mo.
Average Monthly Rent: $649
Change in Rent year-over-year: 1.9% increase
First Quarter Vacancy Rate: 7.5%
Mortgage Payment v. Rent Payment: $213 cheaper to rent
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| Among the best cities for renters: Columbus, OH. Photo: Joe Sohm/Getty Images |
No. 4: Columbus, Ohio
Average Monthly Rent: $625
Change in Rent year-over-year: 2% increase
First Quarter Vacancy Rate: 8.6%
Mortgage Payment v. Rent Payment: $170 cheaper to rent
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| Among the best cities for renters: Phoenix, AZ. Photo: Joshua Lott/Bloomberg/Getty Images |
No. 3: Phoenix, Ariz.
Average Monthly Rent: $685
Change in Rent year-over-year: 1.5% increase
First Quarter Vacancy Rate: 8.9%
Mortgage Payment v. Rent Payment: $152 cheaper to rent
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| Among the best cities for renters: Jacksonville, FL. Photo: Thinkstock |
No. 2: Jacksonville, Fla.
Average Monthly Rent: $737
Change in Rent year-over-year: 0.8% increase
First Quarter Vacancy Rate: 10.2%
Mortgage Payment v. Rent Payment: $104 cheaper to rent
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| Among the best cities for renters: Tucson, AZ. Photo: Edward McCain/Getty Images |
No. 1: Tucson, Ariz.
Average Monthly Rent: $604
Change in Rent year-over-year: 1.5% increase
First Quarter Vacancy Rate: 9.4%
Mortgage Payment v. Rent Payment: $277 cheaper to rent
Here are the nation's five worst cities for renters:
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| Among the worst cities for renters: San Francisco, CA. Photo: Thinkstock |
No. 5: San Francisco, Calif.
Average Monthly Rent: $1,720
Change in Rent year-over-year: 3.7% increase
First Quarter Vacancy Rate: 4%
Mortgage Payment v. Rent Payment: $1,906 cheaper to rent
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| Among the worst cities for renters: Boston, MA. Photo: Steve Dunwell/Getty Images |
No. 4: Boston, Mass.
Average Monthly Rent: $1,625
Change in Rent year-over-year: 3.6% increase
First Quarter Vacancy Rate: 4.6%
Mortgage Payment v. Rent Payment: $598 cheaper to rent
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| Among the worst cities for renters: San Jose, CA. Photo: Thinkstock |
No. 3: San Jose, Calif.
Average Monthly Rent: $1,362
Change in Rent year-over-year: 5.3% increase
First Quarter Vacancy Rate: 3.4%
Mortgage Payment v. Rent Payment: $2,321 cheaper to rent
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| Among the worst cities for renters: Manhattan, NY. Photo: Andrew Harrer/Bloomberg/Getty Images |
No. 2: Manhattan, N.Y.
Average Monthly Rent: $3,459
Change in Rent year-over-year: 4.8% increase
First Quarter Vacancy Rate: 3.2%
Mortgage Payment v. Rent Payment: $4,754 cheaper to rent
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| Among the worst cities for renters: New Haven, CT. Photo: Christopher Capozziello/Getty Images |
No. 1: New Haven, Conn.
Average Monthly Rent: $1,504
Change in Rent year-over-year: 3.8% increase
First Quarter Vacancy Rate: 4.5%
Mortgage Payment v. Rent Payment: $69 cheaper to buy
