With the help of our team of data scientists over at BPInsights, we want to share with you the top metro areas in the U.S. that saw the largest rent growth over the past five years. We’re not going to go super in-depth on why these metros made the list—it may be a lot of different reasons, like population increases or influx of new jobs or companies offering higher wages, more development, whatever.
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Here I just want to give you the hard data as to which metros saw the biggest rent growth over the past half a decade. And then maybe you can do some research to see if you want to invest there.
7. Phoenix, Arizona
Starting with number seven, it’s the sunny area of Phoenix. In 2015, the average rent in Phoenix was $1,049. But over the last five years, rent shot up by $508 to $1,558 on average in monthly rent.
That means it increased by 48% over five years. If you’re looking at it in terms of a compounded annual growth rate, which is a big fancy term, that would mean rents on average increased 8.2% per year over that timeframe. Crazy.
6. Las Vegas, Nevada
Now, if you placed your bets correctly, you would have been in the money with our number six metro: Las Vegas. Rents in Las Vegas shot up by 48.9% over the past five years, from $1,112 per average up to $1,655 in average rent in 2020.
Now this slightly edged out Phoenix with an 8.3% compounded annual growth rate over that same time period.
5. Atlanta, Georgia
Number five, we travel east all the way to Atlanta. Atlanta saw a 51.3% rent growth from 2015 to 2020. Their average monthly rent of $1,288 in 2015 increased by $600 towards that today for an average monthly rent of $1,949. That computes to an 8.6% compounded annual growth rate.
4. Arlington, Texas
For number four, we have Arlington. Rents there shot up by 53% over the past five years from $894 in average monthly rent in 2015 to $1,368 in 2020. You know that rent increase is $474, equivalent to an 8.9% growth rate
3. Sacramento, California
Moving back to the West Coast, our number three metro: Sacramento. Sacramento experienced a 53.4% increase in rent growth from 2015 to 2020. Their average monthly rent went from $1,066 in 2015 and increased by $569 to where it’s at today for an average monthly rent of $1,636. That’s an 8.9% compounded annual growth rate
2. Colorado Springs, Colorado
In second place, we head to the Springs. No, not Palm Springs. We’re talking about Colorado Springs.
Colorado Springs earned an impressive (if you’re a landlord) or scary (if you’re a tenant) 55.4% increase in average monthly rent over the past five years. Since 2015, monthly rents have increased by $595 there, from $1,074 in 2015 to $1,600 in 2020. That compounded annual growth rate: 9.2%.
1. Saint Petersburg, Florida
At number one, the metro with the highest rent growth over the last five years is St. Petersburg.
Did you guess that? No worries, I didn’t either.
St. Petersburg, also known as the Sunshine City, blew past the competition with a 63.8% rent growth from 2015 to 2020. So in 2015, if you were to rent a place, it would have on average cost you $1,199. Fast forward five years, that same unit would cost you $765 more every month—$1,964 a month. That’s right, $765 average rent increases in five years.
St. Petersburg was the only metro in America with a compounded annual growth rate over 10%, at 10.4%.
I hope you enjoyed digging into the numbers on the top seven metros with the highest rent growth over the past five years. Now, before I end, I do want to throw a little disclaimer out there. As is true of investing in stocks, past performance is not indicative of future results. So before you grab this list and assume that you are automatically going to get a 10% increase in rent every year if you buy a property in St. Petersburg, that may not be true.
As always, I encourage you to do your research and make sure you have the right team set up before you jump into a new real estate market.
Are you planning to invest in any of these markets? What do you think will make next year’s lists?
Tell us your plans and predictions in the comments.