Cities with the Hottest Rental Markets in 2021

Though some major U.S. rental markets are still recovering from pandemic price drops, these metropolitan areas are experiencing significant surges in rental prices and popularity among tenants.

At the onset of the COVID-19 pandemic last year, rent prices plunged in many of the country’s major metropolitan areas. Some residents with flexible work situations and the necessary financial means moved out from city centers to smaller, more suburban areas. For those who remained, federal eviction moratoriums—which prevented landlords from raising the rents of existing tenants or evicting those who could not pay—kept many financially-vulnerable tenants housed during stay-at-home orders.

These factors in part caused rents to remain low for much of the past year, despite an unexpectedly booming housing market. But now, with life in the United States slowly returning to normalcy, rising rents are causing rental markets to heat up. In many cities, they’re even hitting all-time highs.

However, rental demand is not surging equally across all metropolitan areas. The West and South have broadly seen sizable rent increases over the past six months, while some of the largest markets in the country, such as New York City or San Francisco, are still experiencing diminished demand.

While rising rent prices are a sign of a strong real estate market, it is important to note that they also decrease housing affordability and contribute to a higher cost of living. Without sufficient affordable housing, rising rents can significantly diminish an area’s accessibility to lower-income residents, especially with home prices also at record highs. To better understand which cities are the most popular among renters this year, the Insurify data science team referred to national rental data for the 75 largest metropolitan areas and identified the cities with the hottest rental markets in 2021.

Insights

• National averages. Across America’s 75 largest metropolitan areas, the average Rental Market Hotness Score was a middling 56 out of 100. As of the second business quarter of 2021, the median monthly rent in the United States was $1,765. This figure represents a 1.8 percent increase in median rent prices when compared to the prior six-month period, when the median monthly rent was $1,734. The average rental vacancy rate in the 75 cities evaluated in the second quarter of 2021 was 5.8 percent, representing a 7 percent decrease from the previous two business quarters.

• Geographic distribution. Despite Toledo, OH, having the hottest rental market in the country, the South and the West dominate the rest of the top 20 hottest rental markets, taking 14 spots combined. The West has eight cities on the list, the South six, while the Northeast has four, and the Midwest only two.

• Expensive markets are the slowest to recover. Insurify’s data scientists found a significant, negative correlation between a city’s hotness score and its median monthly rent in the second quarter of 2021 (R = -0.34, p = 0.003). This means that metro areas with higher rent prices to begin with are more likely to have “cold” rental markets, at least for the time being. Indeed, some of the country’s largest and traditionally expensive markets like Boston, Seattle, Washington, D.C., and New York City all have bottom-ten hotness scores among the 75 largest metro areas in the country. San Francisco—the most expensive city for housing in the nation—ranks dead last, due to high Q2 vacancy rates and rental prices that are still falling when compared to 2020.

Methodology

The data science team at Insurify, an auto insurance comparison site, consulted public data from the U.S. Census Bureau and from Zillow’s Observed Rent Index to identify the 20 metropolitan areas with the hottest rental markets. Cities were ranked using a proprietary scoring algorithm on factors including rental vacancy rate, percent change in rental vacancy rate, and percent change in median monthly rent cost. Cities received a Rental Market Hotness Score ranging from 0 to 100.

The U.S. Census Bureau compiles quarterly data on vacancy rates, which is defined as the proportion of rental inventory that is vacant for rent. Metro areas with already-low and falling rental vacancy rates, indicative of higher demand, received a higher hotness score. On the other hand, cities with already-high and rising rental vacancy rates, indicative of lower demand, received a lower hotness score. Insurify data scientists accounted for fluctuations in vacancy rates by comparing Q2 2021 rates to the average rates across Q4 2020 and Q1 2021.

The online real estate marketplace Zillow also computes an Observed Rent Index for metropolitan areas across the country. The index represents the mean of listed rents that fall into the 40th to 60th percentile range for all homes and apartments in a given region, and it is both seasonally adjusted and weighted to ensure representativeness across the entire rental market. Rental markets with steeply increasing monthly rent prices over time received a higher hotness score, while markets with stagnant or negative monthly rent prices received a lower hotness score. To be consistent with vacancy rate analysis, monthly rent prices were averaged to the quarter level and compared over the same period.

This study considered only the 75 largest metropolitan areas by population in the United States.

Cities with the Hottest Rental Markets in 2021

20. Riverside, California

• Rental market hotness score: 70.9

• Average monthly rent cost (Q2 2021): $2,254 (28 percent above the national average)

• Average increase in rent value (2020-2021): + 5.4% (Double the national average)

• Change in vacancy rate (2020-2021): + 48%

19. Albuquerque, New Mexico

• Rental market hotness score: 71.7

• Average monthly rent cost (Q2 2021): $1,280 (27 percent below the national average)

• Average increase in rent value (2020-2021): + 4.5% (1.7 times the national average)

• Change in vacancy rate (2020-2021): 0%

18. Oklahoma City, Oklahoma

• Rental market hotness score: 73.0

• Average monthly rent cost (Q2 2021): $1,156 (34 percent below the national average)

• Average increase in rent value (2020-2021): + 2.30% (-1.1 times the national average)

• Change in vacancy rate (2020-2021): – 54%

17. Richmond, Virginia

• Rental market hotness score: 73.8

• Average monthly rent cost (Q2 2021): $1,346 (24 percent below the national average)

• Average increase in rent value (2020-2021): + 2.6% (same as the national average)

• Change in vacancy rate (2020-2021): – 32%

16. Akron, Ohio

• Rental market hotness score: 75.8

• Average monthly rent cost (Q2 2021): $1,026 (42 percent below the national average)

• Average increase in rent value (2020-2021): + 3.3% (1.2 times the national average)

• Change in vacancy rate (2020-2021): – 12%

15. Atlanta, Georgia

• Rental market hotness score: 76.3

• Average monthly rent cost (Q2 2021): $1,689 (4 percent below the national average)

• Average increase in rent value (2020-2021): + 4.3% (1.6 times the national average)

• Change in vacancy rate (2020-2021): – 16%

14. Sacramento, California

• Rental market hotness score: 77.5

• Average monthly rent cost (Q2 2021): $1,989 (13 percent above the national average)

• Average increase in rent value (2020-2021): + 3.6% (1.4 times the national average)

• Change in vacancy rate (2020-2021): – 18%

13. Knoxville, Tennessee

• Rental market hotness score: 77.8

• Average monthly rent cost (Q2 2021): $1,385 (22 percent below the national average)

• Average increase in rent value (2020-2021): + 4.5% (1.7 times the national average)

• Change in vacancy rate (2020-2021): + 1%

12.Charlotte, North Carolina

• Rental market hotness score: 78.0

• Average monthly rent cost (Q2 2021): $1,597 (10 percent below the national average)

• Average increase in rent value (2020-2021): + 3.2% (1.2 times the national average)

• Change in vacancy rate (2020-2021): – 49%

11. New Haven, Connecticut

• Rental market hotness score: 78.7

• Average monthly rent cost (Q2 2021): $1,527 (13 percent below the national average)

• Average increase in rent value (2020-2021): + 2.5% (-1.1 times the national average)

• Change in vacancy rate (2020-2021): – 70%

10. Tulsa, Oklahoma

• Rental market hotness score: 78.8

• Average monthly rent cost (Q2 2021): $1,140 (35 percent below the national average)

• Average increase in rent value (2020-2021): + 3.3% (1.3 times the national average)

• Change in vacancy rate (2020-2021): – 45%

9. Las Vegas, Nevada

• Rental market hotness score: 79.4

• Average monthly rent cost (Q2 2021): $1,555 (12 percent below the national average)

• Average increase in rent value (2020-2021): + 5.2% (Double the national average)

• Change in vacancy rate (2020-2021): + 30%

8. Allentown, Pennsylvania

• Rental market hotness score: 83.4

• Average monthly rent cost (Q2 2021): $1,587 (10 percent below the national average)

• Average increase in rent value (2020-2021): + 4.6% (1.7 times the national average)

• Change in vacancy rate (2020-2021): – 16%

7. Virginia Beach, Virginia

• Rental market hotness score: 85.8

• Average monthly rent cost (Q2 2021): $1,432 (19 percent below the national average)

• Average increase in rent value (2020-2021): + 3.3% (1.3 times the national average)

• Change in vacancy rate (2020-2021): – 65%

6. Rochester, New York

• Rental market hotness score: 87.1

• Average monthly rent cost (Q2 2021): $1,282 (27 below above the national average)

• Average increase in rent value (2020-2021): + 3.9% (1.5 times the national average)

• Change in vacancy rate (2020-2021): – 41%

5. Providence, Rhode Island

• Rental market hotness score: 89.3

• Average monthly rent cost (Q2 2021): $1,664 (6 percent below the national average)

• Average increase in rent value (2020-2021): + 3.9% (1.5 times the national average)

• Change in vacancy rate (2020-2021): – 48%

4. Phoenix, Arizona

• Rental market hotness score: 92.9

• Average monthly rent cost (Q2 2021): $1,667 (6 percent below the national average)

• Average increase in rent value (2020-2021): + 5.5% (2.1 times the national average)

• Change in vacancy rate (2020-2021): – 20%

3. Greensboro, North Carolina

• Rental market hotness score: 95.5

• Average monthly rent cost (Q2 2021): $1,290 (27 percent below the national average)

• Average increase in rent value (2020-2021): + 3.8% (1.5 times the national average)

• Change in vacancy rate (2020-2021): – 70%

2. Fresno, California

• Rental market hotness score: 97.6

• Average monthly rent cost (Q2 2021): $1,677 (5 percent below the national average)

• Average increase in rent value (2020-2021): + 5.3% (Double the national average)

• Change in vacancy rate (2020-2021): – 17%

1. Toledo, Ohio

• Rental market hotness score: 100

• Average monthly rent cost (Q2 2021): $1,060 (40 percent below the national average)

• Average increase in rent value (2020-2021): + 3.6% (1.4 times the national average)

• Change in vacancy rate (2020-2021): – 89%

If you have any questions or comments about this article or would like to request the data, please contact insights@insurify.com.