In this article, we will be analyzing the US rental market while covering the 15 states with the highest rent in the US. If you wish to skip our detailed analysis, you can move directly to the 5 States With the Highest Rent in the US.
The Housing Crisis Limiting Choice for Buyers
The United States has been subject to a housing crisis where the existing housing inventory is just not enough to fulfill the rising demand. Amidst high interest rates, homeowners are not willing to sell their houses since they will have to pay a higher rate for a new house. This adds to the housing shortage. As median home prices continue to climb, Americans who were looking to buy a house are considering renting one instead.
Recent Spike in Construction Bringing Rents Down
Renters across the nation experienced some relief as the median rent went down in May for the first time ever since the pandemic hit the US. On July 31, Fortune reported that the median rent grew by only 0.5% in June, year over year. However, the renting market might not be as bright as it appears. This is because the new construction is concentrated in certain metro areas or it is high-end with high rents. Hence, affordable housing units still tend to be unavailable for many. Those residing in states such as Florida which have high costs of housing, have less income to spend on other requirements after paying for rent. This has ultimately led to many renters entering the state of being cost-burdened. As defined by the U.S. Department of Housing and Urban Development, cost-burdened households are those that pay 30% or more of their income towards rent.
Breaking down the aforementioned situation, the housing crisis still remains a national issue. New housing is expected to bring rents down in the future but 40% of these new rentals to be completed this year will be concentrated in metropolitan areas with high job growth such as Austin, Nashville, Denver, Atlanta, and New York. Simultaneously, 70% of the new housing inventory available for renting will be the luxury class. This situation deprives numerous tenants from accessing moderately priced housing simply because they don’t have access to it in their areas or it is not a viable option due to the high cost. You can also take a look at some of the affordable places to live near NYC.
Housing Options in Costly Markets
Although renters across the country are vulnerable to soaring rental costs which limits their housing options, several home builders offer diverse and affordable housing in costly states such as Florida and California which are sought-after housing destinations for homebuyers. Some of these include Lennar Corporation (NYSE:LEN), PulteGroup, Inc. (NYSE:PHM), and KB Home (NYSE:KBH).
Lennar Corporation (NYSE:LEN) is a leading US home builder that offers affordable houses for all generations. Lennar’s Multifamily segment also develops high-quality multifamily rental properties. On October 27, the company reported the opening of Madison condominiums at the San Francisco Shipyard. This San Francisco master-planned community offers quality urban living at reasonable prices and is situated in California which has one of the highest housing costs in the country. Commenting on the affordability of these houses, Michael Hochstoeger, Director of Operations for Lennar’s Bay Area Urban division, said:
“In a market where the median condominium price exceeds $1 million, Madison offers the incredible opportunity to own a beautifully designed, centrally located Lennar home for a starting price in the high $300,000s”
Madison is also in close proximity to downtown San Francisco which will be an additional advantage for the residents in the community.
PulteGroup, Inc. (NYSE: PHM) builds communities that offer a good standard of living across the US. Through these communities, it continues to build upon its existing footprint in US states. On November 1, the company reported its expansion in Northeast Florida by announcing two communities in St. Johns County which will feature Del Webb and Pulte Homes. While construction is underway, the residential development is expected to open in 2025. Diverse housing options are available under this construction since Del Webb St. Johns community will offer active-adult homes with a wide range of amenities while The Landings community by Pulte Home will be made for families of all ages.
KB Home (NYSE: KBH) is another major home construction company in the US that allows homebuyers to choose from multiple design options to get their houses personalized, based on their preference and budget. The company is also known to create energy and water-efficient residences since they achieve an ENERGY STAR standard, which less than 10% of new homes in the US comply with. Hence, KB Home (NYSE: KBH) provides modern-day houses in many attractive housing markets. On November 3, the company announced the opening of its most recent home community in Hollister, California. The new community is located on Peony Street and provides access to Highway 25, U.S. Highway 101, and Silicon Valley’s major employment centers. Schools, parks, and outdoor recreation options are also situated close by. Earlier in October, the home builder reported the launch of its new Somerset community in Florida’s Palm Coast which provides personalized residences near beaches, priced from the $290,000s.
Now that we have taken a look at the state of the housing market in the US, we can move to the 15 states with the highest rent in the country.
15 States With the Highest Rent in the US
Our Methodology:
In order to compile a list of the 15 states with the highest rent in the US, we acquired real estate data from the US real estate company, Zillow. For every state, we used the median rent as our metric. Finally, we ranked the US states in ascending order of their median rents. The rents have been cited as of November 2023 and represent the latest rental data on housing.
15 States With the Highest Rent in the US
15. Georgia
Median Rent: $1,900
Georgia is one of the 15 states with the highest rent in the US. As of November, the median rent in the state is $1,900. Rental costs in the Atlanta metro area are especially high leading to affordability problems for those who demand to rent affordable houses in the state.
14. Nevada
Median Rent: $1,973
As of November, Nevada has a median rent of $1,973 which makes it one of the states with the highest rent in the US. Although the rents in the market are cooling down, renters still find them costly.
13. Virginia
Median Rent: $1,997
Virginia is one of the 15 states with the highest rent in the US since the median rent is high as compared to many of the other US states. The state’s home buyers have resorted to renting since house prices are high. However, rents in Virginia cause affordability challenges for the renters as they continue to be higher than they were before.
12. Arizona
Median Rent: $1,999
Arizona is another state with a high rent in the US. The state has seen a decrease in the availability of affordable apartment units. The rapid population growth and housing supply deficit have further increased renting costs in Arizona. The state has a median rent of $1,999, as of November.
Investors who wish to increase exposure to the US housing sector can look up Lennar Corporation (NYSE:LEN), PulteGroup, Inc. (NYSE:PHM), and KB Home (NYSE:KBH).
11. Maine
Median Rent: $2,000
Maine ranks as one of the states with the highest rent in the US. The state has witnessed a rise in rents since the pandemic’s outbreak. Renters in the state are finding it hard to find houses to rent during the state’s housing crisis since the inventory is low while the demand is high. As of November, the median rent in Maine is $2,000.
10. New Hampshire
Median Rent: $2,050
As of November, the median rent in New Hampshire is $2,050 which is relatively high. Hence, New Hampshire is one of the 15 states with the highest rent in the US. Rents in the state have already reached their highest in at least two decades during 2023. New Hampshire is also experiencing a housing shortage.
Some of the top housing stocks to buy according to hedge funds include Lennar Corporation (NYSE:LEN), PulteGroup, Inc. (NYSE:PHM), and KB Home (NYSE:KBH).
9. Rhode Island
Median Rent: $2,100
Rhode Island also makes it to the 15 states with the highest rent in the US. As of November, the state has a median rent of $2,100. As the rents continue to grow during scarce housing supplies, many of the households in Rhode Island feel cost-burdened. This is because they have to spend a major portion of their income on house rents.
8. Colorado
Median Rent: $2,200
Colorado is a costly rental market since the median rents are as high as $2,200, as of November. Denver is one of the US metros which have witnessed the highest rent increases. The building costs have risen resulting in more expensive homes demanding even higher rents. Rents in the state are outpacing incomes.
7. New Jersey
Median Rent: $2,475
New Jersey has a shortage of affordable apartments available to be rented for low-income renters in the state. The rent prices in most of the counties in New Jersey have also been growing which adds to the issue of housing affordability. As of November, the median rent in the state is $2,475.
6. Washington
Median Rent: $2,520
Washington is one of the 15 states with the highest rent in the US. Although the rents are stabilizing, they continue to be among the highest as compared to the majority of the US states. The state also needs to incorporate more housing units to accommodate the rising population. Rents in the Puget Sound region and King County are high in the state. Washington holds a median rent of $2,520, as of November.
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Disclosure: None. 15 States With the Highest Rent in the US is originally published on Insider Monkey.