Comparing Rents in the 10 Best Places to Raise a Family

It is quite an accomplishment to be featured on a livability list at Livability.com and something that apartment owners should make note of when gauging rental prices and rental housing demand. In the case of the list we are featuring, the 10 best places to raise a family are featured. Assuming most families seek out homes with two to three bedrooms, those will be the focus for each of these ten rental markets. Using the RentHub data for average rental prices and average square feet for apartments, the vast differences of each apartment market can be seen.

The following is a brief description of how Livability.com ranks their cities:

We crunched the data. We looked at the quality of the schools, the crime rate, and measures of the quality of healthcare and economy. We gave points to communities that are walkable, diverse, have lots of parks and active children’s sections in their libraries. We favored communities with shorter commute times (so working parents can be home more and on the road less) and larger populations of other kids to play with.

We will highlight some of these community characteristics that will hopefully help you understand the livable fabric of each.

10. Palo Alto, CA

2 Bedroom – $3,500 per month / 1,100 sf
3 Bedroom – $8,750 per month / 2,324 sf

Palo Alto, CA is home to Stanford University. Located in the San Francisco Bay Area, the city is a center for Silicon Valley and the highly regarded technology companies that are found there.
Based on the US Census, over 80% of the residents have a bachelor’s degree or higher. Just over 45% of the households are renter occupied. There are over 66,000 residents, to which +23% are under the age of 18. The median household income is $126,771 (in 2014 dollars). Housing demand in Palo Alto, being driven by university employees and technology sector, along with higher household incomes, are heavy drivers of the apartment market rents here.

9. Bowling Green, OH

2 Bedroom – $665 / 774 sf
3 Bedroom – $782 / 882 sf

The City of Bowling Green, OH is home to Bowling Green State University and the 18,856 students who attend school there. The median age of the city is 23.2 years, with 43.2% of residents being between the ages of 18 to 24. It can be surmised that the student population is the largest driver of demand for apartment rentals and the local economy. A small population found in a central location has presented the city the opportunity to have a walkable downtown with regular customers for the businesses found there. The lower rental rates are better understood when fully realizing the proportion of students that make up the total housing rental market.


8. Homewood, AL

2 Bedroom – $1,045 / 1,093 sf
3 Bedroom – $1,425 / 1,400 sf

A suburb of Birmingham, home to Samford University, Homewood, AL has a total population of 25,708. For a smaller city from this top ten list, Homewood has several parks that helped increase the livability factor. You can also find the Hollywood Historic District, which is on the National Register of Historic Places.

homewood-al-rent-drivers Continue reading


Top 10 Trending Neighborhoods in Major US Cities

It’s summertime in the city which means rents are high, workplace productivity is low, and all inhibitions are out the window. Not only is it prime vacation season, it’s also peak time for finding a new place to live. Apartment rates have been known to increase anywhere between 15% and 20% beginning April and ending around October. So we’ve decided to use our real-time rental data and Heat Map to pull together a summary of what neighborhoods are trending and and who’s flocking to them. While a few of the established submarkets are just now seeing a spike in listings, other’s are outliers experiencing a surge in new multifamily developments and gentrifying demographics.

The following summary was generated by RentHub’s real-time rent analytics in conjunction with census reporter data.


Current Rent Median: $2,650
Last Year Median: $2,450
Increase: 8%
Rent Drivers: Parking, Gym, Secured Entry
Median Age/Income: 30yrs/$40,013
Avg. % of Income Spent on Rent: 79%


Current Rent Median: $1,700
Last Year Median: $1,571
Increase: 8%
Rent Drivers: Laundry, Garage, Granite
Median Age/Income: 35 yrs/$77,512
Avg. % of Income Spent on Rent: 26%


Current Rent Median: $2,400
Last Year Median: $2,200
Increase: 10%
Rent Drivers: Secure Entry, Stainless, Lounge
Median Age/Income: 33 yrs/$50,336
Avg. % of Income Spent on Rent: 57%


Current Rent Median: $2,650
Last Year Median: $2,385
Increase: 11%
Rent Drivers: Stainless, Secure Entry, Gym
Median Age/Income: 37 yrs/$61,000
Avg. % of Income Spent on Rent: 52%


Current Rent Median: $3,262
Last Year Median: $2,895
Increase: 13%
Rent Drivers: Garage, Granite, Pool
Median Age/Income: 37 yrs/$55,959
Avg. % of Income Spent on Rent: 70%


Is the Oil Collapse Affecting Rents?

With 2016 in full swing, the US is coming to grips with the fact that a crisis is upon us.  As of this writing, oil prices have sunk to record lows, thus continuing a free-fall that started nearly two years ago.  Nearly a year ago, oil prices per barrel were $103.  These days, the prices are hovering around $30/barrel with some major investment banks projecting that it will plunge even lower.

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The Effects of Cheap Oil

The consequences of the oil price collapse have been rampant.  On a positive note, gas prices are as low as they’ve been for a while which should make travel by air and auto more palatable.  On a negative note, however, oil companies that have ramped up over the past few years are now adjusting to current market conditions.  According to this LA Times article, BP will be cutting 4,000 jobs by the end of 2017.  They aren’t the only ones to slash headcount either.  Last fall, rivals Shell and Chevron made similar announcements.

Rent Trends in Oil Boom Towns

While the direct effects of falling oil prices are obvious, the indirect ones are trickier (more interesting) to diagnose.  One that we’ve been paying attention to is how oil prices are affecting rental housing markets.  We all know the prevailing mainstream narrative is that rents are rising astronomically as the US has been transitioning away from a homeownership nation.  This recent article in the Wall Street Journal, substantiates that by suggesting that national rents are up nearly 4.6% from a year ago.

But as we dive deeper to get more granular, we’re seeing a different picture in certain markets where oil is a major economic driver.  Remember, we’re constantly tracking and analyzing millions of data points to deliver real-time picture of rental housing markets.  Using our technology platform, we pulled up data on three geographic areas where oil plays a major roll in the economy:  Odessa, TX; Midland, TX; and Williston, ND.  What we uncovered demonstrates substantial rent price declines across each of these markets.

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As these charts depict, median rents in each of these markets have declined substantially.  A closer examination will depict that the upper quartiles (shaded yellow areas) have maintained their heights in Williston, yet have declined in both Midland and Odessa.  While it’s tough to say (conclusively) that these declines are a sign of rent price death (or newfound affordability) in these markets, we can’t ignore the impact of oil in these local economies.  Along these lines, it will be interesting to track the performance of furnished short term rentals and new hotel openings in these markets, as these products were direct beneficiaries of the oil boom.

Not All Oil is Created Equally

According to a recent article from Bloomberg, “[o]il is so plentiful and cheap in the U.S. that at least one buyer says it would need to be paid to take a certain type of low-quality crude.”  The certain type of oil referred to by this buyer is a grade of oil from North Dakota, called North Dakota Sour.

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I’m far from an expert on oil and gas commodities, but with the North Dakota grades of oil commanding even steeper price declines than other grades, one can only wonder whether towns like Williston will be hit harder than other parts of the country.  Time will tell and we’ll keep you posted.


Kwelia is now RentHub! A Word From the CEO

Hello folks.  It is with great excitement that we’re finally able to announce that Kwelia is now RentHub.com.  We’ve been hard at work over the past several months bringing this change to all of you out there and are stoked to unveil this rebranding.  We founded Kwelia to solve problems stemming from a chaotic (and archaic) data ecosystem for rental housing.  Quite simply, it’s long been too difficult to understand local rental housing markets and the current solutions that feature stale and prepackaged data have only contributed to the challenges that stakeholders face daily.  By leveraging technologies such as data science and machine learning, we’re well on our way towards our mission of becoming the market leader in comprehensive, granular, and real-time data analytics for rental housing.  Rebranding to RentHub is an important milestone towards the realization of that mission, as it incorporates many of the thoughtful pieces of feedback that have been delivered our way.  We trust that you’ll share our excitement and enjoy some of the updated features in RentHub.

So what’s new you ask? Click on the desktop to explore our new interface.


We’re not done, though. Please check back often as we’re always plugging away to provide you with the best user experience possible. Also, the hiatus with our data-driven blog coverage of the rental housing market is over. Stay tuned for more thought-provoking content pieces like Survival of the Fittest: Where are Gyms the Most Common Apartment Amenity or USA National Rental Housing Affordability – 2014.

Lastly, if you’re a medium-to-large property management company or ownership group and fancy real-time monitoring of your portfolio, competitive properties, and their local markets, please contact us or follow us on Facebook, Twitter, and LinkedIn to stay connected.


Survival of the Fittest: Where are Gyms the most Common Apartment Amenity?

Continuing our theme of exploring the national rental market, this week we’re turning our attention to amenities. While the first rule of real estate may be “location, location, location,” amenities aren’t too far behind in importance. In rental units, they can make all the difference. Although it may not be the first amenity to come to mind, a gym or fitness room in the building can be very convenient. It would seem to follow that the more extreme the weather or the more metropolitan the city, the more convenient this amenity can be.  If you live in a city with inclement weather, for example, the allure of a gym indoors can be just enough incentive to maintain a workout routine. Or if you live in a city with limited space for outdoor activities, this amenity could be a godsend.  In fact, google search trends substantiate this by strongly correlating searches for gyms with large metro areas (see below).

Google Search Interest Gyms

Google Search Trends Topic interest in Gyms

But while google search trends are one measure of seeing how interest in gyms differ geographically, we thought we’d take this line of inquiry a step farther. Namely, how popular are gyms as an apartment amenity in different cities around the country? We accomplished this by using Kwelia’s nationwide listing database to scan recent listings through the first quarter of 2015.  Using these listings, we were able to calculate the proportion of them with gyms by metropolitan area in the first quarter of 2015. Below are the 10 metropolitan areas (listings > 2000) with the highest proportion of listings with gyms.

As we can see above, nearly 30% of all rental listings in Dayton, OH advertise a gym. Notably, none of these cities is particularly temperate — many have cold winters, hot summers, or frequent rain.

Taking all of the metropolitan areas together, how do the states compare? Are there any regional patterns?

Frequency of gyms in listings by state:

A number of states in the South stand out in particular, as well as Washington state. As seen in the list above, WA has more than one city in the top-10 by listing frequency. Seattle may be known as an outdoorsy city, but that may just lead to greater interest in the gym during the rainy winter months.

Lastly, to avoid a classic error, let’s take a look at the states by total number of listings.

Total number of listings by state:

Now we can see that the gym frequency map above is not simply a population density map, but rather that there are some regions with greater proportions of apartments with gyms. Stay tuned for a look at more amenities, including doormen, granite, and stainless steel.


USA National Rental Housing Affordability – 2014

Kwelia provides price-transparency for the apartment-rental industry. By analyzing millions of data-points, Kwelia can uncover the best deals available for renters, intelligently price apartments for property owners, and predict upcoming real-estate trends for investors.

At the beginning of the year we wrote about 2014’s most and least expensive metropolitan areas in the USA, explaining how Williston, ND had the most expensive rent in the country. From the media (as well as our data) we’ve long known the usual suspects when it comes to the priciest cities. However, we also knew anecdotally that median salaries tend to be higher in cities with higher costs of living. So while NYC and San Francisco rents are very expensive relative to most of the country, is it possible that when compared to the median income there the cities would not be such outliers? Which expensive cities are surprisingly affordable? Conversely, are there cheap cities with low enough median incomes that they are actually fairly unaffordable for their inhabitants? For this investigation, we pulled the data for 362 metropolitan areas (those with at least 2,000 observed rental listings), and used inflation-adjusted 2008-2013 ACS 5-year data for median household income.

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For a full list of all of the MSAs used, see this link for all of the data used in this article and more:
Google docs data

Not surprisingly, one can see a moderately positive correlation between the median household income in a metropolitan statistical area (MSA) and the median rent per square foot (exponential trendline with an R-squared value of .547). Creating this chart allows us to see that while median income and rent are correlated, there are some outlier MSAs in both directions: those with particularly low rent given their median incomes, and those with outsized rent relative to their median incomes.

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For example, looking at income vs. rent for the 15 most expensive and 15 least expensive MSAs, one can see that DC and LA have similar rents, but median income is much higher in DC. Additionally, although Key West, FL is in the top 15 most expensive MSAs, its median income isn’t that different from Branson, MO, which is in the list of the 15 cheapest MSAs.

Noticing these outliers, we wondered how many “expensive” MSAs might actually be affordable, and how many “cheap” MSAs might actually be quite unaffordable. To explore this idea, we set out to formalize the affordability of an MSA by creating an “affordability index” which is just the median income divided by the median price per square foot for an MSA. We then sorted all of the MSAs by this measure and compared their affordability relative to the median MSA (“the median MSA”, as it turns out, is actually roughly 12 MSAs with comparable income/rent ratios including Spokane, WA, Knoxville, TN, and Roanoke, VA.)

Least Affordable MSAs Multiple more expensive relative to the median MSA
1 Williston, ND 2.46
2 New York-Northern New Jersey-Long Island, NY-NJ-PA 2.46
3 Key West, FL 2.43
4 Santa Cruz-Watsonville, CA 2.02
5 San Francisco-Oakland-Fremont, CA 2.02
6 Honolulu, HI 1.96
7 Kahului-Wailuku, HI 1.95
8 Los Angeles-Long Beach-Santa Ana, CA 1.92
9 Boston-Cambridge-Quincy, MA-NH 1.87
10 Santa Barbara-Santa Maria-Goleta, CA 1.86
11 San Jose-Sunnyvale-Santa Clara, CA 1.79
12 Odessa, TX 1.74
13 Miami-Fort Lauderdale-Pompano Beach, FL 1.69
14 San Diego-Carlsbad-San Marcos, CA 1.68
15 Pullman, WA 1.65

How then should the multiplier in the right column of the chart above be interpreted? Take the San Francisco area as an example. It has an affordability multiplier of 2.02, meaning that it is 2.02 times as expensive as the median metro area. What does this mean? Given the median income in the SF area, and the median rent there, one could only purchase (1 / 2.02) times = 49.5% as much apartment space as someone in, say, Spokane, WA (a median MSA) making the median wage.

As it turns out, the list of the top 15 least affordable MSAs is very similar to the list of the top 15 most expensive MSAs. Pullman, WA, however, shows up as an outlier–while rent in Pullman is only $.90/sqft, the median household income in Pullman is roughly $37,000, making it curiously unaffordable for many residents. Additionally, the Washington D.C. area did not make the list of least affordable MSAs. Although it had a median rent of $1.84/sqft, it also has a median household income of nearly $98k, making it actually fairly affordable: DC’s affordability multiplier of .78 (78% as expensive as the median metro) is the same as Pittsburgh, PA.

Most Affordable MSAs Multiple cheaper relative to the median MSA
1 Appleton, WI 0.68
2 Warner Robins, GA 0.71
3 Idaho Falls, ID 0.73
4 Wausau, WI 0.74
5 Huntsville, AL 0.75
6 Lexington Park, MD 0.77
7 Green Bay, WI 0.79
8 Oshkosh-Neenah, WI 0.79
9 Enterprise-Ozark, AL 0.81
10 Bloomington-Normal, IL 0.81
11 Fort Wayne, IN 0.82
12 Gainesville, GA 0.82
13 Ogden-Clearfield, UT 0.82
14 Bay City, MI 0.83
15 Killeen-Temple-Fort Hood, TX 0.83

The most affordable MSAs, however, are much more different from the list of least expensive MSAs. They are much more Midwestern (and less Southern), with almost a third (4/15) in Wisconsin alone. Nearly all of them have median incomes of roughly $50k-$70k, with one exception: Lexington Park, MD, median income–$93k. Although Lexington Park, MD has a very high median income, median rent is only $1.05, making it one of the most affordable places in the USA.

There’s more to affordability than rent and income, but the above provides a rough sketch of which parts of the country are more or less affordable, at least from a rental perspective. With so much national data, expect us to continue to surface insights on different facets of the rental market both locally and on a national scale.

If you’d like to learn more about Kwelia, sign up for our mailing list or log in to find the best apartment deals around you.


Austin Apartment Deals: A Renter’s Cheatsheet

Kwelia provides price-transparency for the apartment-rental industry. By analyzing millions of data-points, Kwelia can uncover the best deals available for renters, intelligently price apartments for property owners, and predict upcoming real-estate trends for investors.


In our last posting, we reviewed Austin’s top apartment deals. Unfortunately (for renters) many of last week’s deals are no longer available, giving testament to Austin’s highly desired real estate market; In 2013, Austin showed above a 95% occupancy rate for apartments,  leaving little room for future renters. Fortunately, Kwelia is here to save the day with yet another iteration on this week’s top  apartment deals in the Austin area.


If you’re a renter who prefers a quieter, more homely (the “cozy” definition, not the “unattractive” one) neighborhood, check out Sabina properties, located in North Austin’s Hancock area. Sabina offers a 2-bedroom, 2-bath, 1,080 square foot apartment with monthly payments of $1,950; Sabina throws in a free month’s rent, reducing the renters’ overall monthly payments to $1,787/month. As a result, Kwelia ranks the Sabina a cool 85/100.

Why this deal wins

Not only does Sabina offer a quiet, safe neighborhood but the apartment comes furnished with luxury granite countertops, stainless-steel appliances and in-unit washer & dryer. Access to an elevator makes moving-in easy to the newly renovated apartments. Additional value is derived from Sabina’s 1-month free promotion when you sign the lease.


Berkshire SoCo

If you’re not a fan of the north, head south and check out Berkshire SoCo. Berkshire is currently offering a 1,221 square foot, 2-bedroom, 2-bath luxury apartment for $1,694/month. Berkshire’s offering has been rated a 65/100 by Kwelia’s algorithms.

Why this deal wins

While Berkshire SoCo is not as highly ranked as Sabina, the property offers a huge advantage – a garage. With a car, a renter will still need to drive 16 minutes into town but will have the flexibility for weekend getaways and explore the beautiful, more rural parts of Texas.


Falcon Ridge

If you enjoy Berkshire SoCo’s location, you might want to also check out Falcon Ridge – a 2 minute drive further south. The additional 2-minute drive will yield a 1,120 square foot apartments with 2-bedroom and 2 bathrooms priced at $1,266 (after 1-free month lease signing). The deal offered at Falcon Ridge is almost too good to pass up, scoring a Kwelia rating of 74/100.

Why this deal wins

Not only does Falcon Ridge offer luxury apartments with elevators for easy move-in, but Falcon Ridge offers many outdoor activities including, but not limited to, access to Williamson Creek, a volleyball court, two swimming pools, jogging trains, and public BBQ grills – perfect for some fun in the sun!

Coming up next week…

Grab these apartments while you still can because, like our last posting, most apartments are only on the market for a week! None the less, the team at Kwelia will be your eyes-and-ears keeping you up-to-date on the best apartment deals within the area.

If you’d like to learn more about Kwelia, sign up for our mailing list or login to find other apartment deals throughout the area.


Austin Apartment Deals:  A Renter’s Cheatsheet

Austin’s growing population has made finding great apartment deals near impossible. We’ve analyzed data and are delivering the Top Austin Apartment deals available right now.

Ranked the fastest growing U.S. city for the fourth year in a row, Austin, Texas’s landscape has changed drastically. Throughout the city, engineering and property companies are scrambling to construct enough housing to host the burgeoning population. Unfortunately, for Texan immigrants, property developers are struggling to keep up with demand.  Naturally, this has resulted in higher rental prices.  For renters like us, finding a good apartment deal is about as rare as a short line at Franklin’s BBQ.

Fortunately, at Kwelia we’ve spent the past couple of years building technology to help analyze and decipher rental housing markets. Among other cool things, our tech continuously scores every apartment on the market to signify how good of a deal it is (the higher the score, the better the deal and vice versa).  Needless to say, we have a good sense of where the rental market is at any point in time.

While we’re accomplishing this using tons of data and really complex algorithms (stay tuned for a future post on this), our goal is to keep things simple and to be as helpful as we can to us renters out here.  With this in mind, we’ve put together a short list of some of the Top Apartment Deals throughout Austin for the week.  Like you, we hate things like spam, or fake listings, so know that as of January 26th, 2015, these were all available and for the taking.  Have at it, ya’ll!

Downtown  –

Austin’s traffic is amongst the worst in the United States, even beating out San Francisco & New York City for the number 2 spot in 2013. As a result, living downtown in the thick of the social and professional mix of things offers huge advantages. Our top pick for the best deal in downtown Austin is located at Gables Park Plaza’s 1 Bedroom, 1 Bath, A3A unit going for $1,730.

gables park plaza table

Why This Deal Wins

As for why this is a such a strong dgables park plaza grapheal, there’s a ton of new construction in this area.  For example, this building is directly in front of the Gables Park Tower building, which was finished last year.  Naturally, these command a premium because they’re brand new (limited wear-n-tear) and are built with the most in-demand amenities.  As such, it follows that there are good deals to be had in the not-so-brand-spanking-new buildings in the area like this one.

In addition to Kwelia’s positive rating (72/100), Gables Park Plaza offers a tremendous location in the heart of Austin with efficient floor plans that help maximize the interior space.  If there is a knock on the unit, it’s proximate to the train tracks that sit behind the building.  However, once compared to other similar floor plans in neighboring complexes, the price/layout/location mix can’t be beat.  This is a deal that certainly won’t be on the market for long.

South Lamar – Recent Construction

For those who prefer to be away from the hustle-and-bustle of downtown, there is great opportunity just south in what’s called the South Lamar area.  In a lot of ways, this is the best of both worlds given its close proximity to the SoCo and South 1st districts, lower density, and access to downtown.  Our top pick for the best deal here is at The Hamilton.  Known for its scenic location, The Hamilton has a 1 bedroom, 1 bath, 800 square foot apartment for rent priced at $1,010 per month. Amenities include elevators and granite countertops, resulting in a Kwelia Health Score of 77/100.

hamilton table

Why This Deal Wins

To understand why this is a good deal, it’s necessary to compare it with some surrounding properties.  Most around it hhamilton chartave Kwelia Ratings lower than the 50s (in the 20s in some cases).  According to our data-driven insights, we’ve determined that granite is a major driver of rent around here.  While this can be interpreted in many ways, one obvious interpretation is that this area is dominated by older construction that doesn’t feature trendy amenities like granite.   to put this in comparison, the surrounding properties rankings rank from 20 to 58 out of 100 and typically have less living space.

South Lamar – New Construction

As alluded to earlier, some of the best deals in town will be recently-constructed properties around a bunch of brand new construction.  In a similar vein, there are good deals to be found in some off-peak (read: not in downtown) new construction properties.  Often, these will be in lease-up mode (seeking initial tenants after property is built) and their management companies want them filled – ASAP.  Some want them filled so badly they’ll offer specials to entice renters.  As a case in point, our next deal is at the Cielo, which is again in South Lamar.  Check out the 1 bedroom, 1 bath (A2 plan) located at Cielo.  Now, although the sticker reads that these are $1435/mo, the price comes down to $1315 after the one-month-free special.

cielo table

Why This Deal Wins

Cielo’s current offering stands out amongst the surrounding properties. Not only does Cielo offer a tremendous price per square foot withicielo graphn the area, but the luxury apartment is also equipped with granite countertops and on-site elevators. However, perhaps one of the biggest selling points is Cielo’s 1-month free incentive; this reduces the overall rent by 8% and further increases this apartment’s great value. As a result, Kwelia ranks Cielo’s apartment a cool 70/100.

Coming up next Week….

Next week we’ll be covering the north area of Austin, delivering you the best, most recent deals that hit our radar. If you’re interested in staying up-to-date on the best real-estate prices feel free to join our mailing list.

Interested in seeing how your rent stacks up to your neighbors or looking to move soon? Sign-in to Kwelia and get the dirt on whether you’re paying the best price possible!

Note: Kwelia continuously acquires new data on a daily basis, giving you the most up-to-date overview on current apartment prices. Due to Kwelia’s daily updates, some of the Kwelia Scores mentioned may have changed. To see the latest Kwelia Scores, please sign-in.”


2014’s Most and Least Expensive Metros

As our growing database continues to reinforce, real estate is inherently local. Reflecting this notion, many of our previous posts revolve around analyses within cities. Whether comparing rental price trends to the Case-Shiller 20-city index or mapping out rental affordability, we’ve primarily focused on market-level data for our posts. Recently, however, our curiosity has led us to dig into broader questions on a national level. How do different cities, or even regions, compare on a variety of features? We have barely begun to showcase the geographical breadth of our data–until now.

The Kwelia rental database includes hundreds of metropolitan statistical areas (MSAs) nationwide, enabling us to provide insights into nearly every rental market in the United States. When taken together, that range allows us a uniquely macroscopic view of the national rental market. Although there are many dimensions (such as amenity composition, rental descriptions, unit types, etc.) on which we can compare different metros, we will save those for future discussions.  For this post, we’ll focus on one high-level characteristic: price. Here, we consider prices as the median USD per square foot for a metropolitan area. Without further ado, the most expensive metro areas in the United States for 2014:

Most Expensive Metro Areas in the USA 2014

Most Expensive Metro Areas in the USA 2014

Riding the wave of the oil boom in the Bakken shale formation, Williston, ND catapulted to the top of the list of most expensive metropolitan areas in 2014. At $2.74/sqftmedian rent, it is a full $.16/sqft more expensive than the New York metropolitan area ($2.58/sqft) and the San Jose-Sunnyvale-Santa Clara area (also $2.58/sqft). The surging demand for oil workers to tap the Bakken shale and a scant supply of people (mostly men) willing to endure the hard work, grueling hours, and remote location sent median wages Williston, ND soaring north of $75,000. High disposable income coupled with a limited supply of housing subsequently pushed median rents to the impressive level observed. Nevertheless, whether the market there can sustain those rents in the face of new apartment construction and tanking oil prices remains to be seen in 2015.

Least Expensive Metro Areas in the USA 2014

Least Expensive Metro Areas in the USA 2014

Among the rest of the most expensive metropolitan areas are few surprises, with the New York area and Silicon Valley rounding out the top four. Honolulu, HI cracked the top five with a median rent of $2.27/sqft. Notably, with the exception of Williston, ND, all of the top 15 most expensive metro areas are coastal (or in the case of Hawaii, an island).

Unlike the most expensive group, the least expensive MSAs are predominantly Southern/Midwestern and landlocked. Albany, GA (home of Ray Charles, Deion Branch, and Paula Deen, among others) had by far the cheapest median rent ($.50/sqft) of any metro area in the United States. However, with inflation-adjusted median income at just under $40,000 and unemployment above the national average, it also wasn’t the most well-off.

Taking the above example, “most expensive” isn’t necessarily synonymous with “least affordable”, and vice-versa. One’s purchasing power varies with real income, so an analysis of which MSAs are the most affordable requires consideration of real income (and typically also the price of a fixed basket of goods, which would include more than just rent).

Which metro areas are the most and least affordable? Check back soon for the next blog post in our ongoing exploration of the national rental market.


Does “Apartment Chopping” Make Sense?

I just read a thought-provoking article over at The Brooklyn Reader reporting that across Brooklyn property managers are chopping up existing apartments to add additional bedrooms. The basic logic of this makes sense–the more renters an apartment can support, the more potential income to be spent on increasing rents. However, the apartment will also become more cramped and less valuable on a “per renter” basis.

Naturally, I wanted to take a more data-driven look at this. I decided to use Bed Stuy as a case study, since it was one of the neighborhoods mentioned in The Brooklyn Reader’s article. Here are some median rent statistics for Bed Stuy in the last 60 days taken from our Competitive Intelligence product (click to enlarge):


The spread in rent between one and two bedroom apartments in Bed Stuy is currently at $305 dollars. So, it seems at first glance that if you can inexpensively add a bedroom to an existing one bedroom, you should definitely do so. But, number of bedrooms is not the entire story in terms of apartment value. One bedroom apartments are more attractive to renters, at least in terms of what the market signals in terms of rent per square foot: $2.12 for one bedrooms vs. $2.00 for two bedrooms. So, you can expect to lose around 5.6% in per square foot value after converting a one bedroom to a two bedroom apartment in Bed Stuy, since the total number of square feet is not going to change.

Furthermore, the converted two bedroom is likely to have to closer to 800 sqft (the one bedroom median) than 1,000 sqft (the two bedroom median) since, after all, it used to be a one bedroom. Let’s split the difference and assume it’s a bigger one bedroom at 900 sqft.: that’s still 10% less than the median two bedroom, so we’re not going to end up with a full-sized two bedroom apartment.

Taking those adjustments into consideration, we can expect the actual increase in value to be much lower: $1,924 – (5.6% of $1,924) – (10% of the previous result) = ~$1,645. That’s only $26 more than the one bedroom average, and almost certainly not worth the cost of the conversion.

This is obviously a simplistic analysis, but I was skeptical that you could take an existing apartment that’s presumably been designed for a certain number of occupants, shoe-horn in an extra bedroom and get something substantially more valuable. The basic reason for this is that it does not take into account the fact that you’re not really adding value from the renter’s perspective, and what the renter is willing to pay for an apartment is all that really matters. You’d be better off adding nicer finishes, which do add a lot of incremental value (but that’s another post.)

This analysis is also specific to Bed Stuy, and it may actually make sense in other areas where the numbers look different–say where two bedroom apartments have a higher or similar per square foot value than one bedroom apartments, or where the difference in size between typical one and two bedrooms isn’t so pronounced.

If you want to dig deeper into this kind of data & analysis, check out the free trial of our Competitive Intelligence product!