Rent Report, October 2020: The State of the Rental Market

Apartment Guide’s October 2020 Rent Report highlights year-over-year rent trends and price fluctuations that renters may be experiencing in various parts of the United States. We compare rent prices for studio, one-bedroom, two-bedroom and, at times, three-bedroom apartments to determine which unit types and which of the country’s most populated cities are becoming more affordable or more expensive for renters.

We also offer a key few takeaways and insights — such as whether or not markets with the largest rent increases are also those with the most expensive rent prices, and which regions of the country are most favorable to renters right now.

In this report:

• National rent prices, on average
• Regional rent pricing trends, on average
• State rent pricing trends, on average
• Studio highlights in top markets
• One-bedroom highlights in top markets
• Two-bedroom highlights in top markets

Pricing trends shift notably by unit type and region

It has been a year of change, and that reality is playing out in shifting rent trends across the country.

Studios fall below one-bedroom units in price

For the first time in a while, studio apartments — which have outpriced one-bedrooms in a number of prior analyses — are the least expensive unit type. Both studio and one-bedroom apartments are trending down on price more often than up in major U.S. markets.

More markets reflect pricing increases on larger units

In contrast, the ratio of cities with increasing vs. decreasing rents largely equalizes for two-bedroom units and shifts to reflect a larger number of cities with rising rents for three-bedroom apartments.

Evaluating the top 50 U.S. markets by unit type, we note that studio prices have increased in 20 cities and decreased in 30 from one year ago. One-bedroom units have risen in 17 markets and fallen in 33. Two-bedroom unit rent prices have grown in 22 markets and shrunk in 28 and three-bedroom prices have risen in 27 markets and fallen in 23.

Household consolidation may be playing a role

These trends could reflect a trend toward household consolidation due to the sweeping economic effects of the COVID-19 pandemic to date. According to a report released by Pew Research Center in September, 52 percent of adults 18 to 29 are living with their parents because of the pandemic — the first time that a majority of young adults have reported living at home since the Great Depression. Although it’s unclear whether or not this trend could be impacting renters, it’s certainly a possibility. According to Pew Research, a similar trend took hold during and after the Great Recession of 2007 to 2009.

There’s also reason to believe that shared living arrangements are on the rise due to a growing number of parents moving in with their adult children — a trend that has been on the rise for some time now. Nearly 79 million adults, or 31.9 percent of the adult population, lived in a shared household in 2017 — an increase from 1995, the earliest year with comparable data (28.8 percent). Harvard’s Joint Center for Housing Studies has noted that nearly 10 million households in the 50-to-64-year-old age group are cost-burdened, making housing security and financial solvency growing challenges in this demographic.

Unique trends are gaining footholds in each region

There’s also a polarity playing out by region. In the West, prices are down across-the-board while in the South, prices are up across-the-board. In the Midwest, prices are relatively close to being unchanged and the Northeast is the region experiencing notable pricing fluctuations per unit type.

The only factor bridging the regional divide is two-bedroom prices, which are up in three of four regions.

Some top-priced cities are watching rents drop

Some cities find themselves in both the top 10 markets for rent prices and the top 10 for falling prices. This may mean that renters who have traditionally paid the most for multi-family housing may be less interested in continuing to do so given the pandemic, and could potentially be directing their earning power toward a shift to single-family homes.

National average rent price trends

• One-bedroom apartments were more expensive than studios by a small margin — a contrast to past comparisons when studios have sometimes been more expensive
• Studio prices are down year-over-year — and down 6 percent from where they were over the summer
• Larger rentals, from one-bedroom to three-bedroom units, are more expensive than they were a year ago by 3 to 7 percent

Rent prices have increased modestly year-over-year except for studio apartments, which have decreased. Here’s the national average rent price per unit type over the past three years:

Regional highlights

• The West is the only region where rent prices are down on all unit types
• The South is the only region where rent prices are up for all unit types
• The Midwest is the only region where rent prices are flat or in close vicinity on all unit types
• The Northeast is the only region that is experiencing more variable pricing swings by unit type
• In three of the four regions, prices on two-bedroom units are up year-over-year

Rent changes by region

• West: Studio, one-bedroom, and two-bedroom units all cost less than they did at this time last year by 2 to 4 percent
• South: Studio, one-bedroom, and two-bedroom units all cost more than they did at this time last year by 2 to 4 percent
• Midwest: Studio and one-bedroom apartments are flat year-over-year, while two-bedroom units are up slightly
• Northeast: Studio and one-bedroom units are going for less, while two-bedroom units are going for more

State highlights

• The states are somewhat evenly split between increases and decreases
  • Studios: 41 percent of states reflect rent increases, 43 percent show decreases, 2 percent are flat and 14 percent cannot be ranked due to insufficient data
  • One-bedrooms: 47 percent show increases, 49 percent show decreases and 4 percent are flat
  • Two-bedrooms: 55 percent show increases, 43 percent show decreases and 2 percent are flat
• Notably, the larger the unit, the larger the percentage of states seeing price increases

City highlights: All unit types

• Eight cities — Boston, Jersey City, Los Angeles, New York, Oakland, San Diego, San Francisco and San Jose — are in the 10 most expensive markets across all bedroom types
• One of those cities, San Francisco, is experiencing across-the-board rent decreases

Studio highlights

• Seven of the top 10 cities for rent prices are in California
• Three cities — New York, San Francisco and San Jose — are among the most expensive markets as well as the biggest price decreases
• Four cities — Jacksonville, Louisville, Oklahoma City and San Antonio – rank in the top 10 for lowest rent prices and biggest drops

Highest rent prices

All of the country's 10 most expensive markets for studio apartments are in either the West or Northeast regions.

Biggest increases in rent prices year-over-year

Six of the 10 biggest jumps were by more than 30 percent.

Lowest rent prices

Every region except the Northeast has at least one city in the bottom 10 for studio rent prices.

Biggest decreases in rent prices year-over-year

Rent drops in the 10 most impacted cities started above 20 percent and reached more than 40 percent, depending on the market.

One-bedroom highlights

• Six of the top 10 cities for most expensive rent prices are in California
• Four cities — Los Angeles, New York, San Francisco and San Jose — are among the most expensive markets as well as the biggest price decreases
• Two cities — Gilbert and Oklahoma City — rank in the top 10 for lowest rent prices and biggest drops

Highest rent prices

The Midwest does not have a city in the 10 most expensive for one-bedroom units.

Biggest increases in rent prices year-over-year

All four regions have at least one city on the list of top 10 for growth in one-bedroom rent prices.

Lowest rent prices

Three states — Arizona, Oklahoma, and Texas — each claim two cities each on this list.

Biggest decreases in rent prices year-over-year

All four regions have a presence on the list of most notable price drops for one-bedroom units.

Two-bedroom highlights

• Five of the top 10 cities for rent prices are in California
• One city — San Francisco — is among the most expensive markets as well as the biggest price decreases
• Two cities — Fresno and Wichita — rank in the top 10 for lowest rent prices and biggest drops

Highest rent prices

The West and Northeast have a strong foothold here as the South claims one city and the Midwest is noticeably absent.

Biggest increases in rent prices year-over-year

One city is seeing a pricing increase of more than 50 percent and North Carolina appears twice in the top 10.

Lowest rent prices

The Midwest and the South have a strong presence among the lowest-priced markets for two-bedroom units.

Biggest decreases in rent prices year-over-year

Two western states, Arizona and California, comprise half of the top 10 cities for price drops.

A mounting affordability crisis

As the pandemic and other factors, such as aging Baby Boomers, continue to shape the U.S. economy, housing demographic trends and housing policy are likely to be front and center. Traditional guidance about how we live and spend may be giving way to new realities. New research by Harvard’s Joint Center for Housing Studies indicates that almost half of all renters are cost-burdened, meaning that they spend more than the recommended guideline of 30 percent on housing — the latest indicator to point to a growing housing affordability crisis in the U.S., particularly among renter households.

Methodology

To determine average rent prices, we started with September 2020 data from Apartment Guide and Rent.com’s multifamily rental property inventory. From there, we evaluated changes seen since September 2019. Monthly prices are based on the average price for that respective month. We used a weighted average formula that more accurately represents price availability for each individual unit type and reduces the influence of seasonality on rent prices in specific markets.

The U.S. Census divides the country into four geographic regions: Northeast (Connecticut, Maine, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, and Vermont); Midwest (Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota and Wisconsin); South (Alabama, Arkansas, Delaware, Florida, Georgia, Kentucky, Louisiana, Maryland, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia, District of Columbia and West Virginia) and West (Alaska, Arizona, California, Colorado, Idaho, Montana, Nevada, New Mexico, Hawaii, Utah, Washington and Wyoming).

The top 100 cities in our analysis were determined by 2019 U.S. Census Bureau population estimates. We excluded cities with insufficient inventory in each time period to eliminate potential outliers or highly volatile data caused by a small sample size. Rent price increases and decreases per time period are based on the percentage change of apartment rental prices from September 2020.