These Major Markets Have the Lowest Apartment Sale Prices
Detailed analysis of the most—and least—affordable investment markets, drawing on Yardi Matrix data.
As deal activity remains limited nationwide, we’re taking a look which multifamily markets can be considered the most affordable for investment when analyzed by per-unit prices in institutional transactions. To that end, we’ve ranked the top rental markets in the nation by the lowest asset prices in the working-class Renter-by-Necessity (RBN) segment, as defined by data provider Yardi Matrix.
Using Yardi Matrix data, we listed the top 50 largest metros in the U.S. by order of most affordable RBN per-unit average prices. The list is mapped below and ordered by the lowest average prices in each of the major rental markets in the nation.
Key findings
- Year-over-year RBN price-per-unit growth in 2023 was positive in just eight metros, three of which posted double-digit increases—Pittsburgh, Central Valley and Milwaukee. Compared to 2019, the average price increased the most in St. Louis (100.6 percent), Central Valley (70.9 percent) and Phoenix (67.2 percent). In New York, it dropped 50.5 percent during the period.
- 2021 marked the highest spike in RBN prices (up more than 100 percent) in metros Raleigh – Durham, Chicago, Detroit, Harrisburg, Southwest Florida Coast, Las Vegas and Los Angeles.
- Year-over-year contractions in the RBN segment of 50 percent or more were registered in 2022 in Las Vegas, Harrisburg and Raleigh–Durham.
- Metros on the West Coast had the highest-priced RBN assets, only trailing Long Island.
- The sales volume reported in 2023 rose on a year-over-year basis only in Central Valley and San Jose. Compared to 2019, the largest increases were recorded in Grand Rapids and Orange County.
- Metros where the RBN PPU dropped year-over-year in 2023 and fell below 2019 values, included San Antonio, Detroit, Houston, Lansing–Ann Arbor, San Francisco, San Jose, Harrisburg, the Twin Cities and New York.
In 2023, the average U.S. price per unit for RBN apartments stood at $147,256, which was $128,500 below the $275,764 Lifestyle average, and some $30,000 below the $187,361 overall average. Last year, the overall investment total amounted to $65.1 billion, $40 billion of which involved upscale properties, while the remaining $25.1 billion included working-class assets. Interest rates, job offerings, inflation, oversupply—these factors contributed to and will continue to command the trajectory of multifamily pricing.
“If the plan is to implement a value-add strategy and cash-flow with no plans to redevelop, then the best way to acquire an affordable deal right now is to take great risk in an unknown market or find an off-market deal with assumable debt or seller financing,” stated Ari Rastegar, CEO of Rastegar Co., an investment firm present in 13 states, but most active in Texas.
The price palette for multifamily investors interested in value-add plays is quite varied. Within the 50 metros we researched for this set, the average price per unit in 2023 ranged from $63,347 in Harrisburg, Pa., to $334,711 in Orange County. Meanwhile, developers delivered 60,258 RBN units across these 50 metros last year, just a fraction of the 309,073 Lifestyle units completed during the same interval.
The metros with the lowest apartment sale prices, by average per-unit prices in the RBN quality segment, with a population above 1.5 million had, in 2023, the average RBN per-unit price below $100,000. There were 13 such metros, including tertiary markets Cleveland–Akron, Ohio ($65,159), Lansing–Ann Arbor ($79,581), Milwaukee ($93,014) but also larger markets like Houston ($77,055), Pittsburgh ($82,431), Detroit ($87,633) Indianapolis ($90,220), the Twin Cities ($93,808) and Kansas City ($98,773).
Following two very strong, high-volume years for the investment environment, mounting financing challenges brought on by repeated increases of the interest rate by the Fed led to significant declines in transaction volumes. The sales volume declined in all 13 metros in this bracket, with year-over-year declines larger than 80 percent posted by San Antonio, Detroit and Kansas City. The RBN per-unit price fell in all but two of these metros–Pittsburgh (29.4 percent) and Milwaukee (15.6 percent). The largest declines were recorded in the Twin Cities (-41.3 percent), Detroit (-34.2 percent), and Texas metros Houston (-31.6 percent) and San Antonio (-29.2 percent).
After marking 2019 as the last "unexceptional" year of the decade, we compared 2023 property sales and values to figures reported in 2019. We discovered that RBN sales dropped in all cases, with the largest sales volume declines in San Antonio (-73.9 percent), Twin Cities (-67.9 percent) and Lansing–Ann Arbor (-67.8 percent). The average RBN per-unit price marked a decline in six of these metros, including in the Twin Cities (-26.7 percent), Houston (-6.5 percent), Detroit (-4.6 percent) and San Antonio (-0.8 percent). Among the metros that posted increases in the price per unit during this period were Pittsburgh (17.6 percent), Kansas City (29.6 percent), Indianapolis (40.2 percent) and Oklahoma City (42.8 percent).
The RBN inventory grew in 2023 in 11 of these 13 markets in this group, except in Pittsburgh and Milwaukee. Leading by volume of RBN units delivered in 2023 were Twin Cities (2,579 units), San Antonio (1,992 units) and Houston (1,387 units).
In the next grouping, with the average RBN per-unit price between $100,001 and $149,000, still among some of the lowest apartment sale prices, there were another 11 metros, notable ones including Columbus ($102,765), Cincinnati ($103,641), Dallas ($119,638), Atlanta ($122,051), Charlotte ($125,531), Philadelphia ($132,517), Tampa ($137,528) and Chicago ($145,152).
"The Sun Belt has become more popular for people to relocate as it increasingly offers cheaper housing and a lower cost of living, not to mention warmer weather," noted Rastegar. "When we’re investing, we’re laser-focused on population migration trends so we can concentrate on the major cities that provide huge opportunities for multifamily developments and building new communities. Austin and Dallas are some of the fastest-growing U.S. markets for businesses and residents alike, so that’s where the majority of our recent investments are located," he added.
Year-over-year through 2023 the RBN sales volume declined in all metros in this grouping. Compared to 2019, three metros became more attractive to investors, with RBN sales up between 19 percent and 123 percent—Grand Rapids, Columbus and St. Louis. In the remaining eight, RBN sales dropped, with the largest declines—66 percent to 70 percent—occurring in Cincinnati, Atlanta and Philadelphia. Property values in the working-class segment rose in just two of the metros on a year-over-year basis, Cincinnati (1.3 percent) and Chicago (0.2 percent), with the largest decreases in Philadelphia (-28.3 percent), Charlotte (-24.0 percent) and Atlanta (-20.7 percent). Compared to 2019, the RBN price per unit increased in all. The highest gains were registered in St. Louis (100.1 percent), Columbus (51.7 percent) and Grand Rapids (48.3 percent), and the lowest in Chicago (8.5 percent), Tampa–St. Petersburg (19.5 percent) and Dallas (25.3 percent).
Developers delivered RBN apartments across all the metros in this bracket, with the largest volumes reported in Atlanta (2,976 units), Columbus (1,949 units), Dallas (1,944 units) and Charlotte (1,686 units). Dallas and Tampa–St. Petersburg had the largest volumes of prospective units, 5,850 and 5,944 units, respectively.
Right in the middle of the ranking were another 13 metros, with the average RBN per-unit price ranging from $159,028 in Central Valley to $197,336 in Portland, Ore. In between these values were Austin ($159,526), Southwest Florida Coast (the contiguous space below Tampa-St. Petersburg, consisting of the Fort Myers and Sarasota markets and surroundings - $160,810), New Jersey ($161,459), Orlando ($162,990), Las Vegas ($162,990), Nashville ($166,087), Salt Lake City ($170,551), Baltimore ($171,015), New York ($179,098), Phoenix ($192,953) and Inland Empire ($196,702).
The high interest rates had little impact on investment activity in Central Valley with RBN sales volume rising year-over-year in 2023 by 21.4 percent. In the remaining metros in this group, RBN sales volume decreased year-over-year by 80 percent or more in Las Vegas, Phoenix, Salt Lake City, Southwest Florida Coast and Austin. Las Vegas also marked an 88.1 percent decline in the RBN sales volume registered in 2019, while the Inland Empire, Phoenix and Salt Lake City posted decreases greater than 70 percent.
The average RBN price per unit decreased on a year-over-year basis in 2023 in three of the metros in this bracket—New York (-45.2 percent), Phoenix (-26.2 percent) and Portland (-21.6 percent). Compared to 2019, the average RBN per-unit price decreased only in New York (-50.5 percent), while the largest increases were registered in Central Valley (70.9 percent), Phoenix (67.2 percent), Nashville (47.0 percent) and Southwest Florida Coast (42.9 percent).
RBN stock expanded in all these 13 metros in 2023. The largest volumes of deliveries by unit number were reported in Austin (2,496 units), Portland (2,043 units), Nashville (1,913 units) and New York (1,764 units). The latter also had the largest volume of RBN units in the prospective phase (12,397 units), followed by Orlando (8,240 units) and Austin (5,333 units).
Metros that can't really be referred to as having some of the lowest apartment sale prices, with the averages here ranging between $200,000 and $300,000 per unit included Sacramento ($201,317), White Plains ($209,618), Miami ($212,797), Washington, D.C. ($213,080), Seattle ($237,799), San Francisco ($244,094), Boston ($276,518), Denver ($282,099) and Los Angeles ($282,901).
Seattle (-80.3 percent) and Sacramento (-79.7 percent) posted the largest declines in the year-over-year sales volumes of RBN assets, but also in 2023 compared to 2019 (-83.3 percent and -76.7 percent). RBN sales decreased in all nine metros in this bracket, both year-over-year and in 2023 compared to 2019. The average price per unit rose only in Denver year-over-year in 2023, up 7.9 percent, and declined by as much as 35 percent in San Francisco. Over the 2019 to 2023 period, White Plains posted the best per-unit price performance, up 56.0 percent, followed by Denver (49.4 percent). Meanwhile, San Francisco was the only metro in this group to record price depreciation, down 16.5 percent.
Deliveries in 2023 were highest in Seattle (4,762 units), followed by another three metros with more than 3,000 units added to the stock: Los Angeles, Miami and San Francisco. White Plains saw just one 82-unit working-class property delivered, and Boston and Sacramento had less than 1,000 RBN units completed throughout the year.
San Diego ($314,496), San Jose ($329,877) and Orange County ($334,711) ranked as the least affordable metros in the U.S. by per unit price. Although no sales were registered in Long Island in 2023 in the segment, the average per-unit price reported in 2022 was $386,683.
The investment volume in the segment recorded in 2023 dropped in two of three California metros in the grouping—Orange County (-46.4 percent year-over-year) and San Diego (-39.6 percent). In San Jose, the volume increased for the second consecutive year, albeit at a moderated pace (16.3 percent), and in Long Island, no RBN sale was registered throughout the entire year. Compared to 2019, all three California markets marked positive sales activity, led by Orange County (75.7 percent). The average price-per-unit decreased in all three California metros last year, with the largest decline among them recorded in San Jose (-16.3 percent). San Jose is also the only market in this bracket where the average price was below the 2019 average, by 17.5 percent.
The working-class inventory grew in all four markets in 2023—highest in Orange County (1,307 units) and lowest in Long Island (199 units). San Jose had the highest volume of units in the prospective stage (40,168 units), followed by San Diego (31,227 units), Orange County (22,668 units) and Long Island (7,507 units).
Unless something drastic happens, affordability will largely be the same at the end of 2024, Rastegar expects. "Lenders are extending and pretending debt on over-levered deals, so sponsors do not become forced sellers. If something breaks, and sponsors are forced to sell, we will likely see a rapid return to positively leveraged acquisitions," he said.
Methodology Notes:
In the writing of this piece, we frequently reference Renter-by-Necessity or RBN when discussing average prices. This is keeping with Yardi Matrix' defalcation of rental housing. For clarity, here's the data provider's definition of the quality segment:
Renter-by-Necessity households span a range. In descending order, household types can be:
- A young-professional, double-income-no-kids household with substantial income but without wealth needed to acquire a home or condominium;
- Students, who also span a range of income capability, extending from affluent to barely getting by;
- Lower-middle-income (“gray-collar”) households, composed of office workers, policemen, firemen, technical workers, teachers, etc.;
- Blue-collar households, which barely meet rent demands each month and likely pay a disproportionate share of their income toward rent;
- Subsidized households, which pay a percentage of household income in rent, with the balance of rent paid through a governmental agency subsidy. Subsidized households, while typically low income, extend to middle-income households in some high-cost markets, such as New York City;
- Military households, subject to frequency of relocation.