Rents Rise in the Midwest As Housing Inventory Remains Tight

After years of soaring housing costs, 2024 brought relief for renters in many parts of the US with rents remaining relatively flat or even falling. However, the Midwest stands as an exception.

Factors Driving Rent Increases

The region has experienced a robust economy and an influx of new residents seeking a lower cost of living. However, this has exacerbated a housing shortage due to lagging residential construction compared to other parts of the country.

Key Rental Markets in the Midwest

Major Midwestern metro areas, including Cincinnati, St. Louis, and Kansas City, Missouri, have witnessed some of the highest rent growth rates in the nation. Cincinnati has seen a significant surge, with the median rent reaching $1,365 in November and a 2.6% increase in the past year.

Causes of Elevated Rents

According to Matt Vance, vice president and Americas head of multifamily research at CBRE, a lack of supply and the increasing number of long-term renters has contributed to elevated rents. With fewer new properties being constructed and renters staying in their units for longer, there is less competition among landlords.

Affordability Concerns

The rising rents threaten to make living costs in the Midwest unaffordable for many residents. Maggie Shreve, a senior citizen in Cincinnati, has faced a 20% increase in her rent since late 2022, placing a strain on her limited income.

Comparison to Other Regions

While the Midwest generally remains more affordable than other regions, the rapid rent growth is closing the gap. According to Realtor.com, minimum wage earners in major Midwestern cities would need to work slightly longer hours to cover their city's minimum rent compared to more expensive areas with a federal minimum wage of $7.25.

Outlook and Recommendations

Experts anticipate that rent growth will continue in much of the Midwest due to the ongoing housing shortage. Danielle Hale, Realtor.com's chief economist, advises households to weigh their options carefully as affordability challenges persist across the spectrum.