What Cities Offer the Best–and Worst–Rental Markets?

Landlords, rejoice: Mortgage applications dropped to their lowest
level in a year last month, and the sketchy real estate market is
producing more renters as the housing slump continues.

Home ownership isn’t for everybody; and with today’s stricter
lending standards–not to mention the cash-poor economy we’re
experiencing–it’s really not for everybody.

Just ask New York City and San Francisco landlords. According to Forbes, residents pay the highest rents in the U.S. in those cities. (Not
suprisingly, both areas front some of the top U.S. home purchase
prices.)

In New York, a resident renting a median-level apartment in one of the five
boroughs will pay $2,922 a month in 2008–a 6.6 percent increase from last year.

In San Francisco, it’s possible to leave your heart, but not a good
a idea to leave your wallet, because rent will cost you 7.8 percent
more than it did last year–$1,904 a month, the biggest increase in the
U.S., Forbes says.

The magazine recently ranked the top 10 Best and Worst Cities for renters; the deals–which the Midwest dominates–include:

  • Columbus, Ohio. With an average rent of $626, fairly hefty vacancy rates and a 300
    percent increase in residential rental unit construction should keep
    the market stable.
  • Houston. The median monthly rent–$707–is close to what Houston
    residents pay for a monthly mortgage
    payment, but since the city has the highest vacancy rate in the
    country, renters can get great units–and rents are only forecast to
    increase 3 percent this year.

Cities with more pricey rental properties include:

  • Boston. With an average rent of $1,658, the city will have a 41 percent reduction in construction in 2008, which should cut into its otherwise OK 5.9 percent vacancy rate.
  • Chicago. The city of Chicago–where I live–has an average rent of $1,010, according to Forbes; that’s due in part to the fact Chicago is second only to New York in financial service jobs and overall rising employment. Last year, the rental market saw almost no new construction, giving it a low vacancy rate–and a price increase prediction of 3.2 percent for the year.

Curious about the other high- and low-rent rollers? Check out Forbes list of the Most Expensive and Least Expensive Cities for Renters.