It might be expensive to buy, but rental prices are also rising across the U.S. While some might think it might be better to rent than own, in some cases, that’s not always the case. Inflation has drastically impacted rental prices, which rose 6.2% year over year in 2022, according to a study by WalletHub.
But some areas in the U.S. are better to rent in than other areas. WalletHub’s latest report on the 2023 Best & Worst Places to Rent in America found that many of the best places to rent are in the western part of the U.S. Looking at not just rental prices but also quality of life standards, the study ranks 182 of the top cities across the U.S. for renters based on 21 key measures of rental attractiveness and quality of life.
The Best Cities for Renters
The study found that the top place for renters, based on the rental market, as well as affordability and quality of life, is Overland Park, Kansas, with a ranking of 61.77 out of 100. Other top places include:
- Scottsdale, Arizona
- Bismarck, North Dakota
- Sioux Falls, South Dakota
- Chandler, Arizona
Some of the worst cities for renters were in the Midwest, including:
- Akron, Ohio
- Jackson, Mississippi
- Memphis, Tennessee
- Detroit (which came in last)
Full rankings of each market measured
Meanwhile, somewhat surprisingly, WalletHub found that the areas with the best rent-to-price ratios were mostly in California: San Francisco, Glendale, Oakland, and Los Angeles, as well as Honolulu in Hawaii. Unsurprisingly, some of these areas also made the list of having the highest cost of living, with Fremont and San Francisco in California topping the list.
The study also found that the areas with the lowest rental vacancy rates were:
- Warwick, Rhode Island
- Hialeah, Florida
- South Burlington, Vermont
- Nashua, New Hampshire
- Lewiston, Maine
How the Cities Were Evaluated
To compile the list, WalletHub compared 182 different cities across the U.S. and gathered data on each city’s rental market, affordability, and quality of life. Each city was evaluated using 21 different weighted-average metrics on a 100-point scale. Some of the metrics included:
- Share of renters
- Rental vacancy
- Average home size
- Rent-to-price ratio
- Cost of living
- Job market
- School rankings
- State bedbug laws
The overall score was then used to rank compared to other cities. The study only includes major cities and excludes the surrounding metro area.
Takeaways for Investors
Affordability isn’t the only thing that renters consider when trying to find a new place, so real estate investors should think the same way. If you’re looking to buy a rental property as an investment, the WalletHub study can give you insight into what renters are considering when looking for a place to rent. Besides pricing, things like an area’s safety, job market, and weather also play a factor in where renters are moving.
Buying a rental property in a fast-growing market can seem like a great way to quickly find tenants, but it can also mean investors experience high turnover. High-growth cities can be a challenge for renters, said John Yeressian, a real estate faculty member at El Camino College.
Yeressian added: “On one hand, these cities may offer expanding job markets, increased investment in infrastructure, and a vibrant atmosphere. This can lead to more rental options, increased amenities, and potential opportunities for renters. However, rapid growth can also drive up rental prices, create housing shortages, and lead to increased competition among renters.”
In other words, renters are looking for more options than just cheap housing. They want a place that is affordable but also has more amenities, a nice atmosphere, and is closer to more job markets. But with growth comes competition, and if prices rise too much, it could drive out not just other potential homeowners but renters as well.
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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.