5 Best U.S. Cities for Renters
BOSTON (TheStreet) -- The median U.S. residential rent has risen about 2% over the past year as America's long-suffering housing market stabilized, but here are five cities where you can still find great deals on apartments and other rentals.
"Most of these cities have relatively low rents that are also falling on a year-over-year basis," says economist Svenja Gudell of market tracker Zillow.com
Zillow, which is famous for estimating the current market value of almost U.S. every home (even those not for sale), analyzed rental conditions in America's most-populous cities based on four factors.
First, the site looked at median asking prices per square foot for all rentals advertised on Zillow.com.
Next, researchers estimated the rental value of a typical residence within a given city (including owner-occupied homes not up for rent), as well as how much these projected values have changed over the past year.
Lastly, the site calculated each community's "break-even" period: how many years a tenant could rent in a given city before buying a home made more financial sense.
Gudell says some communities at the top of Zillow's list got there by avoiding the worst of the U.S. housing bust and foreclosure crisis. That helped cities avoid swarms of residents losing homes to foreclosure and moving into apartments, driving up local rents.
But the expert adds that while Zillow's rankings can show renters where to find great deals, investors might still want to look elsewhere, because communities at or near the top of the list generally have rents that are low and declining, a bad combination for would-be landlords.
"I think that as an investor, you'll probably have a slightly different twist on the study's results," Gudell says.
Click below for a rundown of the five U.S. cities that Zillow found offer tenants the best bang for their buck. (The site ranked all cities on a weighted index of zero to 100, with 100 equaling first place in all data points measured.)
All figures are as of Aug. 31 and refer just to residences within a city proper, not to any properties in surrounding suburbs. Dollar figures refer to the Zillow Rental Index, an estimate of how much a typical property (even those not for rent) would fetch on the open market.
Fifth-best market for renters: Knoxville, Tenn.
Bang for Your Buck score: 67.5 (out of a possible 100)
There's not much to knock about Knoxville's rental market.
The typical property in the University of Tennessee's hometown rents for only around $893 a month -- the 14th-lowest level among America's 100 largest cities -- and rental values dropped by about 4% over the past year. That's the third-biggest decline for any major U.S. community, and far lower than the 1.9% average increase recorded nationwide.
The Marble City also boasts rentals that list for a median of just 76 cents per square foot, well below the $1.02 typical nationwide.
Gudell attributes Knoxville's renter-friendly conditions to the fact that the 179,000-population municipality didn't have as bad a housing bust and foreclosure crisis in recent years as some U.S. locales saw.
"There weren't as many Knoxville homeowners displaced by foreclosure," she says.
In fact, Knoxville's only negative for renters is a relatively short estimated break-even period of 2.45 years, somewhat below the 3.1-year U.S. average. "If you know you want to stay in Knoxville for more than 2.5 years, you're probably better off buying," Gudell says.