During the summer of 2015 Katrina Perez considered 40 rental apartments in Miami’s up-and-coming Edgewater neighborhood before finding a place in her price range. Perez, a 27-year-old account supervisor with public relations firm Quinn, and a roommate currently share a two-bedroom, two-bath apartment with water views. They pay a combined $1,800 a month.
Halfway through her second lease, Perez knows her days in Edgewater are numbered. An ultra-tall luxury condominium is coming up next door. Soon it will block her view and likely lead to a hefty rent increase. ("I'll be neighbors with millionaires," she says with a laugh.) Her roommate is already planning to move in with her parents because she can’t afford to both pay rent and save for a down payment on a home. Meanwhile, Perez is committed to spending less than 30% of her income on housing.
“I’m financially blessed enough to be able to afford to live where I want to in Miami,” says Perez. "I don’t think most of my peers have that same opportunity just because our income has not caught up with the cost of living in Miami.”
See also: The Best Cities For Renters In 2017
Full List: How Renters Fare In America’s Hottest Cities
She’s right. Miami tops our 2017 list of the worst cities for renters, due to extremely low vacancy rates--2.2%--and some of the worst rental affordability stats in the country. The average Miami rent isn't so high at $1,386, 14th most out the 46 major markets we evaluated, but relatively low pay in the city means that rent eats up 36% of the median Miami income, the third-highest share among major U.S. cities. Meanwhile, the low vacancy rate pushed rents up 6.6% last year, the eighth most rapid increase in the nation.
Local experts anticipate price relief at the high end as a number of luxury towers currently under construction come online. Though they expect that relief to be temporary as jobs and wages have been growing, especially in the popular downtown section of the city, meaning the new units will ultimately be absorbed.
Builders have focused construction at the high end of the market, since luxury buildings tend to be more profitable. Between 2014 and 2016, only 10.7% of multifamily construction in Miami was targeted at the lower third of the market. That’s compared to 69.4% at the high end, according to an analysis by Zillow last year.
“The main core of what developers do in Miami is what Miami is known for: waterfront, paradise, the best weather in the country,” says Eddy Martines, cofounder and CEO of Worldwide Properties, a South Beach-based brokerage. “As a result they are very high end.” Laura Neroulias, who moved to Miami from New York in 2015 to work with Perez at Quinn, notes that Miami apartments are much more amenity rich than comparable New York City units.
“The good news is that a lot of what the investors are buying is future rental growth,” argues Anthony Graziano, senior managing director for research firm Integra Realty Resources. “From a renter perspective that means rents have been climbing faster in Miami than they are in other metro areas, but a lot of that is based on the fundamental economy and also based on the demand for rental product, especially on the higher end.”
That luxury supply won’t do much for the average Joe. Rents are growing fastest among low-end apartments. Since home values bottomed in December 2011 rents have mounted 12.7% overall and 19.3% in Miami, according to Zillow. Markets like San Francisco (41.9%), Seattle (35.3%) and Sacramento (20.1%) have seen even higher growth.
Not coincidentally, many of these markets also make our list of the worst cities for renters. From the end of 2015 to the end of 2016 rents in Sacramento, Calif., grew 10%, the most of any city analyzed, catapulting the state capital to the No. 9 spot on our list of the worst cities for renters.
Manhattan, a perennial leader (or loser) on this list, is still by far the most expensive place to rent, with a $3,497 average. Affordability on the island is also rock bottom, with the average rent eating up 54% of the average income. The average rent in San Francisco, the second most expensive city, is more than $500 less than in Manhattan at $2,982. Rents there are 43% of income.
Overall Manhattan ranks third and San Francisco 11th. These coastal hot spots missed repeating their positions last year at the very top of this list thanks to slow to declining rent growth. Manhattan prices gained 1.3% year-over-year, while San Francisco prices declined 0.2%.
"Where we are seeing the most demand for housing, we are not building strong enough," notes John Chang, head of research at Marcus & Millichap, the commercial brokerage and research firm that partners with Forbes on this list.
Behind The Numbers
The aim of Forbes’ annual list of the worst places to rent is to provide a snapshot of the financial reality of being a renter in each market. A Manhattan apartment is ridiculously expensive, but that doesn’t mean it isn’t the right place for you. Just go in with your financial eyes wide open.
Marcus & Millichap provided the data for the list. The brokerage and research firm tracks 46 large markets where they see investor demand. For each of those cities they compiled four key stats that went into our tally:
- Average monthly apartment rent in Q4 2016, net any concessions
- Change in apartment rent from Q4 2015 to Q4 2016
- Average apartment vacancy rate
- Apartment rent as share of average household income
Using this data, Forbes ranked the metro areas by each metric. We then came up with a composite score. Affordability—apartment rent as a share of household income—made up 40% of each area’s score. The other three metrics were equally weighted to make up the remaining 60%.
For more context on all 46 cities, check out our full list. There we’ve also included average monthly mortgage payments, median household income and 2016 employment growth for each city.
For more Forbes cities coverage see:
New York And Florida Dominate 2016 List Of America's Most Expensive ZIP Codes
