As interest rates go up and housing price is still high, it is interesting to forecast the rent growth of major MSAs in the US. Analyzing the past growth of housing rent and value will also provide good insight into understanding future growth.
The below graph describes an MSA (metropolitan statistical area) distribution by percentile score based on housing rent year-over-year growth (x-axis), housing value year-over-year growth (y-axis) during 2020 Q2 - 2022 Q2. The size of the point is determined by rent forecast year-over-year growth (2022-2025).
2020 2Q - 2022 Q2 Rent YoY % & Value YoY % & Rent Forecast YoY % (2022-2025)
Source: Market Stadium unit: year-over-year growth %
The MSA is divided into 4 quadrants.
Blue (quadrant1) - higher rent growth & higher value growth
Green (quadrant2) - lower rent growth & higher value growth
Red (quadrant3) - lower rent growth & lower value growth
Black (quadrant4) - higher rent growth & lower value growth
Blue color MSAs outperformed other MSAs in terms of rent & value growth in the given period. Naples-Macro Island, FL shows the top performance followed by Cape Coral-Fort Myers, FL. A rent forecast in Boise City, ID is predicted relatively higher than other MSAs. In addition to that, rent growth in Boise City, ID has been increasing faster than the value growth.
On the other hand, there are MSAs such as New York MSA & Boston MSA that have a relatively higher rent growth compared to housing value growth. It might be the case that people in those MSAs choose to rent instead of buying a house since housing price is becoming less affordable and interest rates have been increasing fast.
Recently Market Stadium added 4 more MSAs on the platform including 3 MSAs in Florida based on the user's request. As you can see from the below table we could identify that rent growth in those MSAs (Naples, Cape Coral, and Lakeland) has been increasing faster than in other MSAs.
A MSA rank by Rent year-over-year growth (2020Q2 - 2022Q2)
CEO of Market Stadium
Previous Lionstone Investments Research Team