Executive Summary
Rental markets in 2024 showed more moderation than home prices, due to employment shocks, and oversupply. In summary, by analyzing 16 million rental samples on a same-store / repeat rent basis, we found the following
- Highest Rent Growth Markets
- Southeast: Birmingham leads with 10.3%
- California: Sacramento at 4.9%
- Midwest: Louisville, St. Louis, Kansas City showing 3-4.5% growth
- Declining Markets
- Texas: Austin (-3.3%), Dallas (-1.2%), San Antonio (-0.7%)
- Mountain West: Denver (-2.0%), Las Vegas (-1.5%)
- Southeast: Atlanta (-1.5%)
- Economic Factors
- Markets with high tech layoffs (Austin, SF Bay Area) showed rental declines
- Affordable migration destinations (Birmingham, Sacramento) demonstrate strength
- Secondary markets outperforming primary metros
- Job market diversification impacting rental stability
- Comparison to Case-Shiller (Based on data through late 2024): Notable Divergences:
- Austin: Home prices +5% vs rents -3.3%
- Atlanta: Home prices +7% vs rents -1.5%
- San Francisco: Home prices -2% vs rents flat
- Birmingham: Both metrics showing strong positive growth
2024 Rental Market Analysis: Regional Divergence Reveals Economic Shifts
The U.S. rental market in 2024 presented a complex landscape of regional variations, offering insights into broader economic trends and demographic shifts. From thriving secondary markets to cooling tech hubs, the patterns reveal how economic factors, migration trends, and housing supply dynamics are reshaping the multifamily sector. Rental housing data solutions, real estate analytics platforms, and AI for property management have become crucial in navigating this evolving landscape.
Analyzing regional changes in rents
More than 53% of the US population lives in it’s top-50 MSAs. We grouped these MSAs into 5 regions – helping us understand aggregate trends and impacts on rents – factors such as migration, employment and apartment oversupply in these markets.
Broadly the Midwest came out tops, through rent growth remaining in positive territory. However, the Southeast and Mountain West saw a stark drop in rents, which was a function of excess supply as well as falling demand (most of the new supply was at the top-end of the market, vying for top-quartile earners in these respective MSAs)
| 2024 Rent Change (%) | # MSAs | Population | % of US Population | |
| East | 0.9% | 9 | 47,191,863 | 14% |
| Midwest | 2.1% | 18 | 54,484,526 | 16% |
| Mountain west | -1.1% | 4 | 11,679,678 | 3% |
| Southeast | -0.7% | 11 | 39,091,476 | 11% |
| West | 1.2% | 8 | 33,378,532 | 10% |
| Grand Total | 0.9% | 50 | 185,826,075 | 54% |
Rental Market Performance: A Regional Story
The rental market’s performance in 2024 defied national generalizations, instead telling distinct regional stories. The Southeast’s Birmingham-Hoover MSA emerged as the clear leader, posting an impressive 10.3% rental growth. This outstanding performance stands in stark contrast to previous years when coastal markets typically led growth metrics. Sacramento followed with a robust 4.9% increase, demonstrating California’s market diversity beyond its coastal tech hubs.
The Midwest showed surprising strength, with Louisville, St. Louis, and Kansas City all posting gains between 3.2% and 4.5%. This performance suggests a renaissance in heartland markets, possibly driven by affordability migration and growing economic diversification. Traditional coastal powerhouses showed more modest growth, with New York at 1.9% and Boston at 0.8%, indicating a shift from the dramatic rent escalations of the post-pandemic period.
Texas markets uniformly declined, presenting a significant departure from their historic growth patterns. Austin led the decline at -3.3%, followed by Dallas-Fort Worth at -1.2% and San Antonio at -0.7%. This synchronous decline across Texas metros suggests regional economic factors beyond individual market dynamics.
Economic Forces Shaping Rental Patterns
Several key economic forces emerged as primary drivers of rental market performance in 2024:
1. The Tech Sector’s Recalibration
Layoffs and hiring freezes in major tech companies rippled through housing markets. Markets with high concentrations of tech employment, particularly Austin and San Francisco, saw immediate impacts. San Francisco’s flat growth (0.0%) represents a stabilization after previous declines, while Austin’s continued decline reflects ongoing adjustments in its tech-heavy economy.
2. Migration Patterns
Migration trends continued to reshape rental markets, though with evolving dynamics from the pandemic era. Secondary markets benefiting from domestic migration showed strong performance, particularly in the Southeast and inland California. Birmingham’s leading performance reflects both affordable living costs and growing economic opportunities, attracting residents from higher-cost markets.
3. Employment Diversification
Markets with varied economic bases showed greater resilience compared to those dependent on single industries. Kansas City and Louisville, with their mix of healthcare, manufacturing, and service sector jobs, demonstrated this stability with solid rent growth above 3%.
4. Supply Dynamics
Markets experiencing substantial new apartment deliveries, particularly Austin, Denver (-2.0%), and Las Vegas (-1.5%), saw rent declines as new supply met or exceeded demand. Conversely, supply-constrained markets like Birmingham and Sacramento maintained stronger rent growth, highlighting the crucial role of housing supply in rental market performance. Multifamily revenue analytics and AI-powered real estate tools played pivotal roles in understanding and managing these supply dynamics.
The Home Price-Rent Relationship
The interaction between home prices and rental rates in 2024 revealed interesting patterns about housing market dynamics:
- Austin: Home prices rose approximately 5% while rents declined 3.3%. This divergence suggests strong underlying demand for homeownership despite rental sector adjustments. AI-driven property valuations and instant rental valuations provided deeper insights into such anomalies.
- Coastal Markets: San Francisco’s flat rent growth coupled with modest home price declines suggests a market seeking equilibrium after significant pandemic-era disruptions. New York’s modest rent growth (1.9%) alongside stronger home price appreciation reflects the market’s gradual recovery and persistent affordability challenges.
- Secondary Markets: Birmingham showed stronger correlation between home price and rent growth, indicating robust fundamental demand across both rental and ownership markets. Multifamily rental pricing and automated real estate underwriting tools are aiding stakeholders in capitalizing on these dynamics.
US Unemployment Remains Stable Even as Inflation Remains Persistent
Source: Flourish data, BLS
Looking Forward
The 2024 rental market data suggests several trends worth monitoring:
- Southeast and Midwest Strength: The strong performance of secondary markets in these regions may indicate a lasting shift in residential preferences.
- Texas Decline: The synchronous decline across Texas metros bears watching, particularly for signs of whether this represents a temporary adjustment or a more fundamental market reset.
- California’s Diversity: The varied performance of California markets – from Sacramento’s growth to San Francisco’s stabilization and Los Angeles’s slight decline – highlights the importance of local economic conditions over regional generalizations.
- Home Price-Rent Dynamics: Markets showing divergent patterns between home prices and rents may face affordability challenges or opportunities that reshape their housing markets in coming years.
- Integration of Technology: Tools like rental valuation API solutions, fast real estate underwriting software, and Buildium and Yardi integration tools are becoming indispensable for real estate professionals aiming to navigate these complexities efficiently.
These patterns collectively suggest a rental market increasingly influenced by migration patterns, economic diversification, and supply dynamics rather than traditional coastal-inland or primary-secondary market divisions. Real estate portfolio valuation and big data in real estate are set to play key roles in helping market participants understand and leverage these evolving dynamics.
Our quarterly forecast for Q1 and Q2 are out and we believe that rent growth will be in mostly positive territory for the year
Happy investing.
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