Millennials who can't afford to buy homes are helping make suburban Chicago and Miami the most competitive rental markets in the US
The pandemic-induced rise of remote work fueled competition in certain suburbs and Sunbelt cities, from Miami to suburban Chicago.
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- Miami-Dade County is the most competitive rental market in the US.
- Suburban Chicago is in second place followed by North New Jersey.
- Nationwide, housing shortages and rent increases continue to challenge renters.
With much city real estate increasingly out of reach and many millennials finally settling down, the suburbs are in high demand. And nowhere is that more evident than in Miami-Dade County in Florida, which is the most competitive rental market in the country, according to a new report from RentCafe.
The report ranked 137 rental markets in the US, taking into account the market's rental vacancy rate, the number of days a home spent on the market, the number of potential tenants competing for each home, the percentage of tenants who renewed their leases, and the portion of new home constructions finished this year.
Suburban Chicago and North New Jersey came in second and third, respectively. A few other spots in the Midwest, including Grand Rapids, Michigan, and Milwaukee, were also among the top five most competitive rental markets.
Rising competition in rental markets has been shaped in recent years by severe housing shortages — the US is short about 4.5 million homes, according to one recent estimate. Meanwhile, high interest rates over the last couple of years have kept homeownership out of reach for many would-be buyers and deterred many baby boomers from downsizing.
Things tend to be worse for renters, whose median net worth is one-fortieth the median homeowner's. While rent growth cooled last year, rents for single-family homes across the country are about 36% higher than they were pre-pandemic and rents in multifamily buildings are up about 23%.
The pandemic-induced rise of remote work helped accelerate certain moving trends, including millennials leaving cities for the suburbs and people from all over the country flocking to the Sun Belt, including Florida.
Competition spikes
In Miami, a surge in new residents has pushed housing costs ever higher. An average of 19 prospective tenants are competing for each rental, while 96.5% of rentals are occupied.
However, Chicago is catching up. Younger people looking to move into Chicago's suburbs are, on average, among 13 prospective tenants competing for each rental home. Just over 95% of rental units are occupied, as 68.7% of tenants opt to renew their leases and the region has constructed virtually no new apartments recently, RentCafe found.
In suburban Chicago and northern New Jersey, renters and homebuyers are increasingly being drawn in by new amenities — from restaurants to walkable neighborhoods — that appeal to a younger crowd.
With housing costs stubbornly high, many renters can't afford homeownership and are staying put in their apartments, the report found. Across the country, 62.4% of people living in apartments renewed their leases this spring. In Miami-Dade County, 73.6% of renters renewed their leases.
The report concluded that rental markets across the US are "moderately competitive," with a national Rental Competitiveness Index of 73.4 out of 100. This is in part because construction of both single-family homes and multi-family buildings has surged in recent years. That surge in supply helped slow rent growth in many markets.