By Amalia Otet, Contributing Editor
The demand for rental housing is increasing nationwide, with more and more people turning to renting in America’s largest cities. A combination of factors – including limited inventory levels, declining vacancy rates and continued job growth – have pushed rental prices up by 6.5 percent over the past year, to reach a record high of $1,155 in July 2015.
The number of renter households has also seen a robust increase across the country, according to a recently released study by New York University’s Furman Center and Capital One. Philadelphia recorded the largest renter population growth — a whopping 28.2 percent — during the seven-year period studied. In fact, the renter population increased by double-digit percentages in nine of the country’s largest metros between the study years of 2006 and 2013 (which drew on the Census Bureau’s newest available American Community Survey data). The report examined the housing landscape and market trends in the central cities of the 11 biggest U.S. metropolitan areas by population – namely, Atlanta, Boston, Chicago, Dallas, Houston, Los Angeles, Miami, New York City, Philadelphia, San Francisco and Washington, D.C.
Based on share of renters of renter-occupied units, Miami topped the charts with 65 percent. Boston, Los Angeles and New York City followed closely, all with proportions of 60 percent or more in 2013.
Determined to capitalize on the growing demand for rental properties, developers amped up their game and started delivering more units, driving an expansion of the rental housing stock in all 11 cities between 2006 and 2013. Construction activity picked up steam in major metros including Miami and Washington, D.C., where the inventory levels grew by 22 percent and 19 percent, respectively, over the study period.
However, the increased inventory was not enough to meet ever-growing demand, sending vacancy rates down and tightening rental markets. Vacancy rates tumbled in cities such as Boston and San Francisco, which by 2013 were competing with New York City for the title of tightest rental market among America’s biggest cities.
Amalia Otet is a Real Estate Writer for RENTCafé Apartments.