Midwest Rents Surge Amidst Housing Shortage
Amidst a general decline in rents across the US, the Midwest stands as an exception. Fueled by a robust economy and an influx of low-cost seekers, the region has experienced a housing shortage, leading to persistent rent increases.
Elevated Rents Threaten Affordability
The lack of housing supply, coupled with the increasing number of renters postponing home ownership, has kept rents elevated in the Midwest. Major cities like Cincinnati, St. Louis, and Kansas City have witnessed some of the fastest rent growth rates in the country, jeopardizing affordability in one of the last remaining affordable regions.
Insufficient Housing Inventory
A key indicator of housing inventory expansion is a 5% or more delivery rate within two years. While rapidly growing cities like Austin have seen deliveries exceed 25%, most Midwestern cities fall short. As of September, eight out of 10 major Midwestern markets experienced rent growth, with only Chicago and Detroit reporting price reductions.
Sticker Shock in Cincinnati
Cincinnati has witnessed a significant rent surge, with the median reaching $1,365 in November, a 2.6% increase from the previous year. Some residents, like Maggie Shreve, have faced substantial rent hikes, with her two-bedroom apartment increasing by over 20% to over $1,100.
Affordability Comparison
Despite the rent increases, the Midwest remains more affordable than other regions. At the end of 2024, a couple earning minimum wage in major Midwestern cities would need to work less than 40 hours per week to cover minimum rent, according to Realtor.com. However, affordability challenges persist for many households across the income spectrum.
Conclusion
The Midwest's housing shortage has led to a significant rise in rents, particularly in major cities. The lack of new construction and the increasing number of renters delaying homeownership have contributed to the sustained high rents, threatening to erode affordability in one of the few remaining affordable regions in the US.