2018’s Top Rental Markets for investors as analysis shows Baltimore is renting more

A shortage of new homes has left many would-be homeowners renting apartments and properties. Inventory levels remain low, hovering near historic lows as prices soar thanks to less inventory on the market.

Buyers in many areas are paying cash for existing homes, pushing younger buyers into apartments.

Rental markets are booming, and the Wall Street Journal believes a historic low in new homes may be the next housing crisis. It’s difficult for potential buyers to view a home or put a bid in for a home when it sells in days.

A recent analysis found that Baltimore has more renters than homeowners. The trend has slowly been developing over the past decade, with RentCafe.com finding that 52.5% of residents in Baltimore live in a rented property. The figure, from 2016, is an increase from 45.5% in 2006. Homeownership also continues to fall in the city, with just 281,290 residents owning homes.

Maryland isn’t alone with rising rents. Investors are flocking to rental options to help boost their portfolio and ensure recurring income.

Forbes reports the country’s most in-demand rental markets for cold climates are:

Cleveland

Cleveland has the highest potential, according to the report. The housing market has been in the news lately, with a 34-story apartment building, the Playhouse Square, preparing for its formal groundbreaking next week.

The complex will have 319 units and cost $135 million to complete.

Effective Gross Yield (EGY) for the city of Cleveland is 13%, surpassing all other cities on the list.

Myrtle Beach

The housing market in South Carolina is in a boom stage. Myrtle Beach remains one of the top tourist destinations in the state. Affordable housing in the state and the tourist market allows for sustained rental income with seasonal rental common.

Charleston is also booming, with a rental increase of 5.1% in Q4 2016 and an average vacancy of 12.5%.

Detroit

Detroit is having a surprising turnaround. The city’s housing market was so bad at one point that homes were left derelict and many were selling at rock bottom prices. The city, a once thriving metro area, suffered an economic downturn after a boom thanks to the automotive industry.

Detroit is now the second most in-demand rental market, according to the report, with the EGY being 10.8%.

Reports from last week show that Detroit has beaten multifamily vacancy rates in the Midwest, coming in as the lowest in the country alongside Minneapolis. The highest average rental prices can be found in the greater downtown area.

Pittsburgh

Pittsburgh is among the best places to rent apartments, but reports from February suggest a downturn may be occurring. There are more apartment units available, leading to higher vacancy levels and slower rent growth.

The city still boasts an EGY of 12.3%. The figure beats Detroit and Columbus, which are both in the top three rental markets behind Cleveland.

CNBC reports that housing starts fell more than expected in February, leading to concerns that the inventory shortage will continue through the first two quarters of 2018.