Where rents are up and home prices are down
At first glance, it may seem surprising that in some parts of the country, rents are rising even as home prices coming down. Rental and housing markets are driven by different forces, however, which helps shed light on this confusing split. The good news is, if you’re looking to buy a home, there are a few spots where home prices are going down even as rents are going up.
We dug into the data to find the places where this unique dynamic is playing out and why. We also have some thoughts about how you can take advantage of this situation, which includes getting pre-approved for a mortgage to help you stand out in a buyers’ market.
The factors that affect rents vs. home prices
While falling home prices suggest a cooling housing market, rental prices often respond to other dynamics — primarily supply and demand imbalances. When fewer people are buying homes, potential buyers could be pushed more into the rental market, increasing competition for available units and driving rents upward.
Several key factors can contribute to this. Higher mortgage rates can persuade some buyers to delay buying a home, which increases demand for rentals. At the same time, limited rental inventory can create a tighter market, even when there are plenty of homes for sale. Finally, investors can buy up the rental supply, as more properties are typically purchased to be rented rather than sold.
Where it’s better to buy than rent
To create this list, we analyzed the top 100 markets nationwide, focusing on cities where rents increased the most and home prices decreased the most. We ranked each city separately for rent growth and home price decline. Finally, we combined the rankings to highlight the cities with the largest gap between rising rents and falling home prices from November 2023 to November 2024 — the most recent data available.
We looked at data from the Realtor.com® Economic Research team to find the change in median home prices and from the Zillow Observed Rent Index to determine the change in rents.* We compared the top 100 housing markets across the country to see where rents rose and home prices fell.
Bridgeport, CT
- Rent Increase: 6.50%
- Rent Rank: 7
- Home Price Decrease: 10.63%
- Price Rank: 3
- Median listing price: $782,000
Cincinnati, OH
- Rent Increase: 5.60%
- Rent Rank: 16
- Home Price Decrease: 7.05%
- Price Rank: 7
- Median listing price: $319,900
Kansas City, MO
- Rent Increase: 5.20%
- Rent Rank: 23
- Home Price Decrease: 6.76%
- Price Rank: 8
- Median listing price: $372,900
Richmond, VA
- Rent Increase: 5.50%
- Rent Rank: 18
- Home Price Decrease: 2.80%
- Price Rank: 27
- Median listing price: $429,900
Rental trends across regions
In this list, both the Midwest and South have seven cities represented. This is possibly driven by a strong demand for apartments resulting from a robust labor market and increased affordability in those two areas. That demand helps keep home prices relatively stable and leads to more balanced trends, with moderate rent growth and modest home price declines in Midwestern and Southern cities.
In the northeast, three of the four cities on the list are in Connecticut, with the other market nearby in Buffalo, NY. These cities pair strong rent increases with modest or rising home prices. This could possibly be due to an upsurge of rental demand that’s left over from the COVID pandemic, when more and more people moved into the state without a corresponding increase in available apartments.
Tulsa, OK
- Rent Increase: 4.50%
- Rent Rank: 37
- Home Price Decrease: 6.23%
- Price Rank: 9
- Median listing price: $319,995
Augusta, GA
- Rent Increase: 5.00%
- Rent Rank: 27
- Home Price Decrease: 3.19%
- Price Rank: 25
- Median listing price: $300,000
Madison, WI
- Rent Increase: 5.20%
- Rent Rank: 24
- Home Price Decrease: 2.53%
- Price Rank: 30
- Median listing price: $454,900
Winston, NC
- Rent Increase: 7.10%
- Rent Rank: 4
- Home Price Increase: 0.01%
- Price Rank: 59
- Median listing price: $335,000
Hartford, CT
- Rent Increase: 7.60%
- Rent Rank: 2
- Home Price Increase: 0.14%
- Price Rank: 62
- Median listing price: $399,000
Rents leading the way
You’ll notice that Winston, NC, Hartford and New Haven in CT and Buffalo show very slight increases in home price from last year. They still make this list because the corresponding rent increases have more than offset the home price gains. These are competitive housing markets where both renters and buyers are active, perhaps thanks to strong local economies.
San Francisco, CA
- Rent Increase: 3.30%
- Rent Rank: 61
- Home Price Decrease: 9.14%
- Price Rank: 5
- Median listing price: $969,498
Oklahoma City, OK
- Rent Increase: 3.50%
- Rent Rank: 56
- Home Price Decrease: 5.91%
- Price Rank: 10
- Median listing price: $309,995
Oxnard, CA
- Rent Increase: 3.90%
- Rent Rank: 47
- Home Price Decrease: 3.60%
- Price Rank: 19
- Median listing price: $999,900
High-cost markets are cooling
In San Francisco and Oxnard, CA, where median listing prices are extremely high, home prices are falling more sharply but rent increases are modest. This may be because high home prices in these areas make buying unaffordable for many, even as prices drop.
As fewer people buy homes, demand for rentals rises, but rent increases are limited — rents can only rise as much as renters are willing or able to pay. This could signal a cooling housing market in these high-price parts of the country.
Grand Rapids, MI
- Rent Increase: 4.10%
- Rent Rank: 45
- Home Price Decrease: 3.51%
- Price Rank: 22
- Median listing price: $376,250
Little Rock, AR
- Rent Increase: 3.60%
- Rent Rank: 54
- Home Price Decrease: 4.83%
- Price Rank: 14
- Median listing price: $285,000
Chicago, IL
- Rent Increase: 5.70%
- Rent Rank: 15
- Home Price Decrease: 0.03%
- Price Rank: 55
- Median listing price: $359,900
Washington, DC
- Rent Increase: 4.50%
- Rent Rank: 38
- Home Price Decrease: 2.32%
- Price Rank: 33
- Median listing price: $585,000
New Haven, CT
- Rent Increase: 6.20%
- Rent Rank: 10
- Home Price Increase: 0.11%
- Price Rank: 61
- Median listing price: $399,900
Buffalo, NY
- Rent Increase: 5.90%
- Rent Rank: 14
- Home Price Increase: 0.02%
- Price Rank: 60
- Median listing price: $249,945
Higher rental demand in more affordable areas
In cities like Buffalo, NY and Little Rock, AR, where median listing prices are relatively low, rents are still increasing steadily. These markets are already affordable for homebuyers, but a slight increase in home prices or higher mortgage rates might make renting a better option, increasing competition in the rental market.
Columbus, OH
- Rent Increase: 5.30%
- Rent Rank: 20
- Home Price Decrease: 0.03%
- Price Rank: 56
- Median listing price: $359,900
Omaha, NE
- Rent Increase: 4.30%
- Rent Rank: 40
- Home Price Decrease: 1.70%
- Price Rank: 38
- Median listing price: $379,250
National rent and home price trends
These cities are part of a national trend of rental price increases. Of the 100 markets surveyed for this article, only three cities showed rental prices coming down. Compare that to home prices, where 58 cities saw a drop in median home listing prices from a year before. Additionally, the national median existing-home sales price rose 4.7% from November 2023 to $406,100.
This shows the financial benefits of investing in homeownership. No matter what happens with mortgage rates, it’s extremely beneficial for you to have certainty around your budget by owning your own home. Ready to make a move toward homeownership? Start by getting pre-approved then talk to a local Loan Officer who can help you navigate the factors at play in your town.
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* Source: https://www.zillow.com/research/november-2024-rent-report-34650/