Five cities exhibit significant growth in rental searches seen on Homes.com and ForRent.com in Q2. How do economic conditions impact the rental market in these cities and what does this mean for Landlords and Renters?
Our recent Quarterly State of the Rental Market report tracked the top 100 searched cities for rental properties on Homes.com and ForRent.com. We take the top 5 fastest growing cities from this list and examine the economic conditions that contribute to the healthy rental market in these areas. If you’re not in the market to buy your very own home, perhaps a rental property would be a wise investment in these top cities?
In addition to the impressive home buying market, Boston, MA shows clear signs of a fast growing rental market, ranking #1 with a 65% quarterly increase in rental searches on Homes.com & ForRent.com. As we mentioned in the previous Top 5 Improved Home Buying Cities article, the Boston job market is healthy, with a 5.8% unemployment rate[i]. This strong of a job market means future homebuyers and renters are flocking to Boston! In addition to the unemployment rate, the current Rental Vacancy Rate[ii], reported from US Census, is 4.4%, well below the national rate of 8.6%. Vacancies decline when the amount of households exceeds the amount of available housing. The healthy job market strongly impacts the number of increasing households, with both renters and home buyers, in this area, leading to a decreased amount in the available housing. This means Landlords could very well get their asking rent prices due to the limited supply and increased demand.
It’s time for a move to the west coast, and San Francisco, CA ranks #2, with an increase in rental searches at 58% for Q2. The job market in this area is showing signs of improvement with a 13% decrease in the unemployment rate from last year. There is also a significantly low Rental Vacancy rate at 3.2%, which largely decreases by almost 47% from last year and is much less than the national rate. It’s evident the rental market is strong in the San Francisco area; and, because of the significantly low amount of inventory Landlords could be reaping the benefits of increasing rental prices.
Another west coast location, Phoenix, AZ comes in at #3 for the fastest growing rental city, with a 56% increase in rental searches. The job market is clearly improving, with an unemployment rate of 7.5%, below the national level and almost an 18% decrease from the year before! It’s also important to note that in addition to the rental market, Phoenix comes in #7 with the fastest growth in home buyer searches on Homes.com, increasing almost 42% from the quarter before. Whether a renter or a home buyer, the job market is significantly impacting a growth in future residents to the Phoenix area.
Philadelphia, PA, also ranking in the top home buyer search cities, makes the list at #4 and with a 51% increase in rental searches. While showing a flat change in the unemployment rate, the relatively close proximity to Boston and our next top rental search city, Washington DC, could help buffer the rental and home buying market for this area. There is also slightly more inventory available in this area, currently reporting an 11% Rental Vacancy rate; therefore, potential renters may have some negotiation room with the asking rent prices.
Washington, DC rounds up the list of top cities in the rental market. The current unemployment rate is very close to Boston, at 5.7%, and also decreased from last year by 8%. Like many of the other top rental search cities, the rental supply in Washington is relatively limited, showing a recent Rental Vacancy rate of 4.2% and a 34% decrease from last year. There is always the option to buy however. Given the recent average home price index from Case-Shiller[iii] for Washington, a 2.8% annual increase and almost reaching national peaks seen during the housing boom in 2006, the investment may just be worth it!
These are the top most improved rental cities, with the fastest growing searches found on Homes.com and ForRent.com from Q1 to Q2. Whether a home buyer or a renter, the economic conditions in these markets are improving and your next dream home is only a click away with Homes.com and ForRent.com.
[i] Reported by Bureau of Labor Statistics, United States Department of Labor, for metropolitan area and not seasonally adjusted as of June 2012
[ii] Reported by US Census, Housing Vacancies and Homeownership, for metropolitan area as of Q2 2012
[iii] Reported by Standard & Poor/Case-Shiller for top 20 metropolitan areas and non-seasonally adjusted as of May 2012