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Renters vs. Landlords: Who Wins in 2017?

Landlords May Come Out Ahead in these Cities

By K.C. Sanjay | Friday, March 3, 2017


Our recent look at 54 of the largest U.S. metros showed insight into which 10 markets will see the largest savings in rent this year. Though the overall trend for the national apartment market in 2017 will be moderation, renters in some cities should be prepared to see their rents go up.

Markets where rents will increase this year were slow to recover from the Great Recession and, in some cases, were several years behind their counterparts on the list of markets where renters can expect to see some savings.  

Analysis of 54 of the largest U.S. metros identified the 10 markets that will see the largest increase in rent in 2017 as compared to the average annual increase from 2010-2016. Change in elasticity value, which in this case represents renters’ sensitivity to increases or decreases in rents, was also taken into account. To evaluate whether renters in the markets are more or less sensitive to the expected increases, the 2010-2016 average for elasticity was calculated and compared with 2017’s figure.    

Top 10 Markets with Largest Forecast Increase in Rent Level During 2017

  Click to enlarge in new tab.

The markets in the table above are forecast to experience the largest increases in rent in 2017 of the markets analyzed. Some 18 markets recorded annual increases ranging from $3 to $269, with an average annual increase of about $91. It is worth noting that the range for rent increases is much smaller in scale than that for decreases.

Northeast Markets: The Northeast markets of Virginia Beach; Washington, DC; Bethesda; Richmond, VA; Nassau County-Suffolk County, NY; and Montgomery County-Bucks County-Chester County, PA have seen slow growth during the recovery, a much different trend from markets in other parts of the nation. Now they are experiencing a growth phase at an increasing rate, which is reflecting in rent increases of of $85-269. Most of these markets, except Richmond and Nassau County, currently show more sensitivity to rent increases. Renters may shy at the projected hikes, so landlords should be cautious if they want to maintain high occupancy levels. 

Las Vegas: The metro was one of the hardest-hit markets during the Great Recession because of the single-family boom and bust. Now it is projected to show the second-highest increase, $211, on this list. Recovery of Las Vegas’ apartment market started in 2013, two years after most major metros. The pace of rent growth peaked in 2016, but still has enough momentum left to show strong results in 2017. With slow new supply in 2017 compared to the historical norm, residents should expect to pay more for rent than in the past six years.

Sacramento: The metro’s pace of rent growth only started to pick up in 2014, so it is a late recovery market with some steam still left for stable growth this year. Inventory growth remains low, leaving room for additional rent growth. Renters should expect to pay about $62 more in 2017 than they have on average the past six years. Job growth is also expected to increase at a better rate than it did from 2010-2016. Due to higher demand for apartments and increasing job growth, Sacramento renters are less sensitive to increases in price.

Salt Lake City: Salt Lake City is expected to maintain steady job growth in 2017, though the forecast rate is slightly below the six-year average. New supply is still growing, but the rate at which it is being added hasn’t increased substantially over 2016’s level, as it has in some of the markets with expected rent-growth decline. Residents in Salt Lake City should expect an average annual increase of $105 in rent this year compared to annual average increases of the past six years, though the negative change in elasticity value for 2017 shows that they are less sensitive to rent hikes.

Riverside: While major markets in northern California softened in 2016, Riverside experienced some of its strongest growth of the recovery. Job growth in 2017 is expected to be above the six-year average, and should create enough demand to absorb the lower level of new supply. The strength of the market should reflect in rents being about $138 higher this year than the average increases seen from 2010-2016. Riverside residents are less sensitive to increases in prices, though the higher levels of rent in neighboring markets mean that residents of the metro are already getting a relative bargain. 

It’s possible that as rents increase this year, renters in more of the markets on this list will grow increasingly sensitive to changes in price. As things are, the changes in most of these markets may not have as much of an impact on renters there than their counterparts in markets where rents are decreasing.


K.C. Sanjay

K.C. Sanjay

Senior Real Estate Economist

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