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September 14, 2023

Miami holds on to top spot as most competitive rental market despite challenges

As the summer rental season unfolded, the Midwest rises as a contender to Miami's dominance, reshaping the landscape of the US's housing market.

By Alex Summers

In the midst of this year’s summer moving season, Miami retained its title as the most competitive rental market in the US. However, the Midwest region, characterised by its affordability and diverse housing options, emerged as the most desirable destination for apartment seekers. This trend signifies a shift in the preferences of renters, who are increasingly drawn to areas offering a blend of budget-friendly living and quality of life.

rental market, Miami
Despita a high RCI score, Miami has seen a population decline. (Photo by Bilanol/Shutterstock)

The Midwest’s surge in popularity can be attributed to several factors, including the presence of major corporations like Amazon, Walmart, and Ford Motor Co, which have recently expanded or relocated to the region. This influx of businesses has not only bolstered the Midwest’s economy but has also fueled competition in the rental market. As a result, individuals from states with higher living costs, such as California, Florida, Texas and North Carolina, are now considering the Midwest as a viable option for better housing and employment prospects.

Among the standout performers in the Midwest, Milwaukee saw a remarkable rise from the seventh to the second position in the rental market rankings. This jump catapulted Milwaukee ahead of the notoriously competitive North Jersey market, which slipped to third place.

New York and its surrounding areas, including Brooklyn and Manhattan, continued to be magnets for renters in the north-east, featuring in the top 15 rental markets during this season.

Rental market competition

To gauge rental market competitiveness, a Rental Competitivity Index (RCI) by Yardi was calculated. During the peak rental season, the national RCI score stood at 60, indicating moderate competitiveness in the apartment market during the busiest time of the year.

The influx of new apartments onto the market over the past couple of years has increased rental options for tenants compared with the previous year. This expansion resulted in a national occupancy rate of 94% during the peak rental season in 2023, down from the 95.3% rate witnessed at the height of last year’s rental frenzy. The increased supply has provided renters with more choices, with only 60.5% of apartment dwellers opting to renew their leases this season, a decrease from the 63.6% lease renewal rate observed during the same period last year.

As a consequence of the expanded selection, the time taken to fill available apartments has increased, taking five days longer this year than the previous year (37 days versus 32 days). Additionally, there has been a 33% reduction in the number of prospective renters competing for each available unit compared with one year ago, with only ten apartment seekers vying for the same vacant unit this season, as opposed to 15 last summer.

Market analysis

It is noteworthy that over half (54%) of the 139 US markets analysed have experienced decreased competitiveness across all relevant metrics compared with the previous year. Notably, two common signs of softening in the rental market are the increase in the number of days apartments remain vacant and the decrease in the number of renters vying for each available unit.

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Despite the competitive landscape in the Midwest, Miami remains the US's most competitive rental market during the peak rental season, boasting an RCI score of 122. However, Miami faces challenges, including a declining population for the first time in half a century, rising living and housing costs, and an insufficient supply of rental units. Despite developers' efforts to build new apartments in the area, renters in Miami continue to struggle to find available rentals, with a high occupancy rate of 97.1%.

In Broward County, another part of South Florida, the rental market remains robust (RCI score 98), securing the ninth position nationally, followed closely by Orlando in tenth place (RCI score 98). Broward County's popularity is attributed to its appeal to retirees and professionals seeking opportunities in technology, finance and healthcare. With 95.5% of apartments occupied and 66.9% of renters renewing their leases during the peak rental season, competition remains strong.

In Orlando, a limited increase in apartment supply and high demand resulted in a supply shortage, with only 5% of apartments available for rent. As a result, 65.3% of renters chose to renew their leases, leading to an average occupancy period of 32 days and 12 prospective renters competing for each available unit.

[Read more: Miami, LA and New York top list of US cities with most ‘house poor’ homeowners]

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