The Most Competitive Rental Markets Right Now

We calculated the most competitive rental markets in the U.S. right now, using our rental data as well as the Q2 vacancy rates released by the U.S. Census Bureau on July 30, 2024. The San Jose, CA metro area came out on top.

A competitive real estate market is incredibly stressful for prospective renters. Apartment hunting can feel like a full-time job between submitting leads on dozens of apartments, touring units that are rented just days after they’re listed, and budgeting the pay you bring home from your actual full-time job to be able to afford quickly climbing rent prices.

If you lived in a rental market that once seemed like a dream but is now becoming a tougher and tougher climate to rent in, that’s a good indicator that competition is steep. Not every hot market is competitive — take Austin, TX, which has seen a lot of migration but has been able to keep up with the growth by focusing on creating new available rentals. A market becomes more competitive specifically when the demand for apartments outweighs the supply. When new construction stagnates in the face of population growth, then rent prices increase, the average time apartment listings spend on the market before being rented decreases, and renting becomes a lot more challenging.

For this report, we found the most competitive rental markets in America. We analyzed 74 of the largest metro areas in the United States, creating a competitiveness score for each metro area based on its vacancy rate, average time on market of apartment listings, and median cost per square foot, based on our own rental data as well as data from the U.S. Census. We also considered year-over-year trends, looking at how the competitiveness score and median cost per square foot has changed when compared with 2023. As explained in our methodology, total scores are a weighted average of these metrics, with the highest scores being most competitive. 

Below, we've highlighted the top 10 metro areas on our list. You can find the full-ranked list of all 74 metro areas we looked at here. 

California has been home to some of the hottest rental markets for a while now. In our last two Competitive Markets reports (published Q4 2023 and Q1 2023), the San Jose-Sunnyvale-Santa Clara, CA metro area has appeared in the Top 10 Most Competitive Rental Markets list, predicting its jump to No. 1 in this iteration. Riverside-San Bernardino-Ontario, CA has been further behind, at No. 35 and then up to No. 18 — with another seismic jump up to No. 5 this quarter.

What brought the San Jose metro area to the top of our list this time was a simultaneous decrease in the average time on market for listings (down 2% YoY) and increase of median cost per square foot (up 4% YoY and 9% just in the last six months)  — two important indicators of competitiveness.  

The why of it comes down to one simple fact: There is not enough rental housing to sustain the population. Currently, the median home price in San Jose is $2 million, placing homeownership out of reach for lower-income potential buyers and keeping them in the rental market for longer. At the same time, the median asking rent for a one-bedroom apartment is a whopping $2,295 — the No. 5 most expensive on our list. Despite an ambitious residential housing construction plan mandated by the state, Santa Clara county (which includes the San Jose metro area) has been failing to meet high demand for housing for years now. In accordance with the plan, San Jose would need to build 7,775 new housing units per year until 2031 — but the metro area only cracked 1,500 once in the last five years. The most dwellings built in one year so far was 1,710 in 2022.

It isn’t always easy to build in earthquake-prone California cities. Buildings must meet state and local seismic codes, created to ensure that people remain safe during earthquakes, which can be limiting to developers. This is turn causes less housing to be built — and the development that is happening in the area is also catering more towards the Silicon Valley crowd than the lower-income renters in need of affordable housing. And even as tech workers leave Silicon Valley, their impact on the housing markets of Santa Clara Valley  — long considered the heart of the tech hub — comes with aftershocks. The rental market will need time to stabilize and build new, more affordable rental properties that can stave off the current shortage.

High density housing is not a staple of the Riverside-San Bernadino-Ontario, CA metro area. The majority of the housing market comprises single-family homes with large yards — though more multifamily housing may need to be in its future as people continue to move out of nearby Los Angeles into the Inland Empire due to high housing costs.

Vacancy decreased by over a full percent when comparing the last two quarters to the same period last year, landing at an average of 3.65% for 2024 so far — far below what’s considered a healthy vacancy rate of 6 to 8%. The average number of days on market for apartment listings also decreased by 3%, while the median cost per square foot shot up by 7% YoY.

While it’s tempting to use relative affordability (like whether or not the median rent for a one-bedroom apartment is below the national median of $1,569) as an indicator of renter-friendliness, it’s not always the case. Take the Knoxville, TN or Akron, OH metro areas.

The Knoxville, TN area is a rapid climber on our Most Competitive Rental Markets lists. In our Q1 2023 report, it landed in the top half of most competitive markets at No. 29 and jumped up to No. 16 in Q4 later that year. This is largely due to its rapid rent increases. The median cost per square foot of an apartment in Knoxville increased by about 7% in the last year. Not to mention, this time two years ago, the median price of a one-bedroom apartment was only $995 — a world away from today’s $1,200 a month. 

Meanwhile, in a report published earlier this month, Akron, OH came out as the least renter-friendly city in the country. At only $795 a month, the median rent for a one-bedroom apartment may seem affordable to those earning higher salaries in cities with higher costs of living, but it’s quickly climbing out of reach for long-time residents. Two years ago, renters were only paying $1.04 per square foot for an apartment; now, the median cost is $1.12. A lack of new housing supply has deemed the city not renter-friendly, and the No. 10 most competitive rental market in the U.S. right now.

The oldest metropolitan areas in the U.S. are concentrated in the Northeast and the Upper Midwest, while the newest are in the South and the West. Based on our three Competitive Rental Markets reports, older cities tend to have more competition for housing. There’s a few reasons: One, even though their downtowns are known for high-density construction, they lack ample space for new development to supplement the aging housing stock (and have strict preservation laws that dictate how existing buildings deemed historic can be altered); and two, their proximity to recreation, culture, and healthy job markets make them incredibly desirable. When combined, this results in very competitive housing markets with few vacant apartments available. For that reason, it’s unsurprising to see the New York-Newark-Jersey City, NY-NJ-PA; Boston-Cambridge-Newton, MA-NH; Washington-Arlington-Alexandria, DC-VA-MD-WV; and Bridgeport-Stamford-Norwalk, CT metro areas once again on our Top 10 list. However, Chicago-Naperville-Elgin, IL-IN-WI has emerged this quarter as a new addition to this category.

A world-class city in its own right, Chicago has long been one of the most desirable places to live in the U.S. — and a more affordable option for those unable to live on the expensive East Coast in New York City, D.C., or Boston. The price gap between these markets is getting narrower, though. The median cost per square foot for rental units increased by about 6% since last year, as did the median asking rent for a one-bedroom apartment. Unfortunately, median incomes are not rising at the same speed, creating a less affordable city.

Thanks to its status as a burgeoning tech hub in the U.S., Denver grew in population by almost 20% in the last decade or so — an influx that requires a significant amount of housing be built quickly to meet demand. This is a challenge when half of the state is public land, and much of the existing and new housing in the area is focused on single-family homes. Our list indicates that it isn’t quite keeping up with the demand. The Denver-Aurora-Lakewood, CO metro area came in as the No. 10 most competitive rental market, with only a 4% vacancy rate and a median one-bedroom rent price of $1,550. The city did start a number of projects aimed at expediting the construction of available affordable housing — though there has been controversy around raising sales tax dollars to fund this plan.

Below is the full-ranked list of all 74 cities we analyzed.

For this report, we analyzed 74 of the most populated metro areas (MSAs) in the U.S. (per the U.S. Census Bureau) for which all required data was available.

The metrics used to create the “Competitive Score” were the averaged Q1 2024 and Q2 2024 vacancy rates, the estimated average time on market of apartments in the MSAs, and the median cost per square foot of an apartment in the MSA. To compute the score, these metrics were normalized and combined using a weighted average.

To create the “Price Trend Score,” we took the normalized difference between the Q2 2024 median cost per square foot of an apartment in the MSA and the Q2 2023 median cost per square foot.

The vacancy rate data came from the U.S. Census Bureau. Time on market and cost per square foot data came from ApartmentAdvisor. We used a min/max data normalization approach.

The Overall Score was calculated with a weighted average of the Q2 2024 Competitive Score (60% weight), the normalized year-over-year competitive score change from Q2 2023 to Q2 2024 (30% weight), and the normalized year-over-year median cost per square foot change from Q2 2023 to Q2 2024 (10% weight). The highest final score is considered the “most competitive.” The Final Rank is calculated by ranking the metro areas where the highest final score is the most competitive.

For more information about this study, please contact pr@apartmentadvisor.com.