Top Markets for Expected Rent Growth in 2017

Shared Post from Multifamily Executive | By Kayla Devon

California once again dominates the list of rent-growth leaders for the coming year, with more than half of the top markets, but it may come as a slight surprise to some.

Oakland tops the list, with San Francisco and San Jose still in the top 10. Oakland’s rent-growth pace has slowed significantly recently, and San Francisco and San Jose are both experiencing rent cuts. There’s been a lot of fear about oversupply in these markets, which could be contributing to the current situation. The Bay Area economy has experienced a notable decline recently, but its job-addition volumes are substantial.

“[Apartment operators] will pretty quickly realize that the [Bay Area] market hasn’t gone off the edge of the cliff, regaining some confidence on pricing power,” says Greg Willett of MPF Research.

The continued above-average growth in these California markets is good news for business, but it’s squeezing renters more than ever. A one-bedroom unit in San Francisco in October rented for $3,373, on average, which is slightly more than half the area median income monthly paycheck after taxes, according to real estate listing site Rent Jungle.

Las Vegas is the second rent-growth leader for next year, at 6.1%, just behind Oakland. The metro was hit hard by the recession but has experienced improved growth in the past 18 months that makes it a great market going forward. Seattle; Dallas; Nashville, Tenn.; and West Palm Beach, Fla., are the other markets defined as rent-growth leaders for the coming year.

Absent from 2016 are Portland, Ore.; Fort Worth, Texas; Atlanta; and Phoenix, which all are expected to come in just under the cutoff of 4%.

Forecast Rent Growth Leaders in 2017

Rank (MetroForecast Rent Growth)

Oakland                                                     1 (6.5%)

Las Vegas                                                  2 (6.1%)

San Francisco                                           3 (5.7%)

Sacramento                                               4 (5.6%)

Seattle                                                         5 (5.4%)

San Jose                                                     6 (4.9%)

Riverside – San Bernardino                      7 (4.5%)

Dallas                                                          8 (4.4%)

Nashville                                                    8 (4.4%)

West Palm Beach                                       8 (4.4%)

Los Angeles                                              11 (4.3%)

San Diego                                                  11 (4.3%)

Fort Lauderdale                                       13 (4.2%)

Kayla Devon

Kayla Devon is an associate editor for Hanley Wood’s residential construction group. She covers business, products, and technology for both Builder and Multifamily Executive magazines. Find her on Twitter: @KaylaDevon_HW