Despite a nationwide slowdown in rent growth, some multifamily markets have managed to thrive, while others have seen past growth turn negative. Here’s a look at the key markets with the largest year-over-year rent growth and reversals, based on the latest Q2 data from CoStar.
Where are rents increasing the most?
Despite nationwide deceleration in rent growth, several key markets have remained above the national averages with modest growth. With seven of the top 10 markets, the Midwest continues to push ahead as the rent growth leader of 2023, and a few markets from the Northeast have also joined the pack.
1. Cincinnati, OH
This Midwestern market has become the top rent growth driver of 2023, with 4.3 percent growth compared to the second quarter of 2022. Relatively low supply compared to an oversaturated national market has contributed to a healthy balance of supply and demand in Ohio’s largest metropolitan area.
2. Northern New Jersey, NJ
With stabilized vacancy, the North Jersey market has shown rent growth slightly above 3.9 percent, establishing itself as the top market for rent growth in the Northeast region.
3. Norfolk, VA
This Virginia market has seen its asking rent grow by almost 3.9 percent year over year in Q2, the second consecutive quarter that Norfolk has made the top 10 for rent growth. The strength of the multifamily market in Norfolk is in part due to relatively low new construction and stable demand from the presence of the largest naval base in the world, Naval Station Norfolk.
4. Columbus, OH
The capital city of Ohio, Columbus comes in at fourth place, with over 3.8 percent rent growth in Q2. It’s one of three Ohio markets to make the top 10 list and has remained within the top 10 slots since the end of 2022.
5. Indianapolis, IN
Another Midwest rent growth leader, Indianapolis has maintained its position in the top markets for rent growth for over a year. With rent growth at 3.8 percent in Q2, the capital city of Indiana and its surrounding suburbs have outpaced national averages. This market boasts affordability alongside limited development, two factors contributing to its position at No. 5.
6. Chicago, IL
A stable market, Chicago has sustained above-average rent growth for the last year. With modest development keeping pace with demand, this Midwest market has kept vacancy levels low and saw rent growth of 3.5 percent for Q2.
7. Boston, MA
Compared to national trends, this Northeast market has shown relatively high rent growth and remained in the top 10 for two consecutive quarters. Boosted by its low supply and high absorption, year-over-year rent growth for the Boston market in Q2 was 3.5 percent.
8. Kansas City, MO
Consistently in the top 10 markets for rent growth in 2023, the Kansas City market takes the eighth spot with a 3.5 percent increase year over year, outpacing its rent growth during and before the pandemic.
9. St. Louis, MO
The largest metropolitan area in Missouri, St. Louis has been among the top 10 Midwestern markets for rent growth in 2023 and most recently saw 3.4 percent growth.
10. Cleveland, OH
The third Ohio city within the top 10, Cleveland has shown rent growth of 3.1 percent since Q2 of 2022.
Where have rents dropped the most?
These 10 major markets, including formerly hot Sun Belt markets that drove rent growth during the pandemic, are seeing the largest declines in rent prices. All 10 have dipped into negative territory, reversing their previous gains in light of supply–demand imbalance.
10. San Jose, CA
San Jose is a tech powerhouse within the San Francisco Bay Area. The Silicon Valley market, which encompasses the city of San Jose and surrounding municipalities, is home to some of the highest rents in the nation. However, the combined tolls of tech layoffs, the rise of remote work, and economic uncertainty have weakened demand, driving down rent growth to -1.0 percent compared to this time last year.
9. Nashville, TN
One of the hottest markets during the pandemic, this Sun Belt market is among the fastest growing metropolitan areas in the nation. But even high demand hasn’t been able to meet the oversupply of rental units in Music City. Supply-side pressures have driven multifamily vacancy into double digits, while year-over-year rent growth has dropped into negative territory at -1.1 percent.
8. Salt Lake City, UT
With oversupply driving down absorption, this Utah market has seen dramatic reversals from its double-digit rent growth in the first half of 2022 to negative growth of -1.2 percent in Q2 of this year.
7. East Bay, CA
Across the Bay from San Francisco, the East Bay market has seen rents decline by 1.3 percent year over year. Encompassing the cities of Oakland, Walnut Creek, and Fremont, this market has maintained minimal rent growth over the last several quarters and began to dip into negative territory in Q2.
6. Orlando, FL
Like many markets in Florida, Orlando was the recipient of a flood of in-migration during the pandemic, spurring development. With supply now outpacing demand, this formerly hot market has turned negative, with rent growth of -1.4 percent.
5. Jacksonville, FL
Another overheated Florida market, Jacksonville has seen near-record levels of development and is now facing growing vacancy with negative rent growth of -1.4 percent.
4. Atlanta, GA
A popular destination for in-migration during the pandemic, the Atlanta metropolitan area continues to be a favorite among developers, with new properties coming online and more in the pipeline. The continuous influx of new units hasn’t been met by sufficient demand, driving down year-over-year rents to -2.0 percent.
3. Phoenix, AZ
High supply in the face of weak demand has plagued the Phoenix market throughout 2023. Rent growth has remained negative since the end of 2022, dropping to -2.7 percent in Q2 this year.
2. Las Vegas, NV
The Las Vegas market has shown the second greatest year-over-year rent decline in the nation. After soaring double digits in early 2022, Las Vegas is now seeing rent growth of -3.1 percent. Demand hasn’t met the high supply, resulting in high vacancy and low absorption despite relative affordability within this Sun Belt market.
1. Austin, TX
Previously a driver of rent growth, this formerly hot multifamily market now leads the nation in rent decline. With some of the greatest oversupply relative to market size in the country, Austin has seen a 3.2 percent decline in asking rent year over year.
Looking for more market insights?
Check out these recent webinars for in-depth analysis:
- State of the U.S. Multifamily Market: Mid-Year 2023 with Christine Cooper and Jay Lybik
- The Supply Outlook with Jay Lybik
- The Strength of Mid-Priced Apartments with Jay Lybik
- Spotlight on Phoenix: State of the Multifamily Market in 2023 with Connor Devereux
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