Renters Are Flocking to These Housing Markets—Should You Invest?

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RentCafé’s end-of-year round-up of top rental cities could help prospective landlords formulate an investment game plan for 2025. However, if you think their list only consists of balmy cities in the Sunbelt states, think again. 

While the South is dominant in the top 30, a surprising number of metros in their top 10 make it necessary to pack a thick coat and some winter boots if you plan to look at homes in many of these hot rental markets. 

Washington, D.C.

Washington, D.C., takes the top spot as the most in-demand city for renters in October. That might cause a few raised eyebrows. However, the nation's capital attracts renters from nearby Baltimore, New York City, and Boston. 

Washington, D.C. often gets a bad rap because of its high cost of living, but it also has a lot of government jobs, a good public transit system, quality healthcare, and overall good quality of life. Generally, unemployment is low, too. RentCafé data showed prospective tenants tend to stay on the site for a short period compared to other cities, implying they are decisive when looking for apartments.

Alex Blackwood, co-founder of Mogul, a real estate investment platform, told MSN.com, "Washington, D.C. will see an influx of people, especially young professionals, ahead of the new administration in 2025."

Minnesota

With financial stress a major issue on many people's minds, Minnesota's reputation as the least-stressed state in America (according to an average of 40 indicators, including hours worked per week, housing affordability, and financial anxiety) could be a determining factor as to why many millennials have chosen to call it home recently—that and abundant employment opportunities, including in Minneapolis.

Minnesota is home to over a dozen Fortune 500 companies and multiple progressive, forward-facing businesses and tech companies, attracting young talent. Also, there has been a real estate boom throughout the state, where housing is generally affordable compared to many other cities, attracting remote workers unafraid of the harsh winters. 

The spike in construction in recent years in the Twin Cities has also kept the area affordable—wage growth has outpaced rent growth in recent years—though the construction has now been curtailed. 

Cleveland

RentCafé cites affordability as the main reason renters are moving to Cleveland, where rent is 30% lower than the U.S. average.

"Cleveland is on my list because the cost of renting is affordable, and it's a great option for people looking to save money," Shannon Feick, co-owner and founder of ASAP Properties LLC, told MSN.com. "The city has a growing healthcare system, and tech industries are attracting young professionals and families who want stable jobs and affordable living.”

Indeed, more than 1,800 new jobs are set to be created for the upcoming Ford electric vehicle plant, which, along with other industries, has been drawing people from Midwest and Northeastern cities like New York City and Columbus, Ohio.

Detroit

Affordability has helped Detroit become a startup and tech haven, with net tech employment in Michigan exceeding 387,000 workers at more than 13,000 tech business establishments in 2020, according to Purpose Jobs. Coupled with the automotive industry, Detroit has been enjoying a new lease on life since the “bad old days” over a decade ago. 

That said, apartment listings are not plentiful, so when they do become available, they tend to go quickly—evidenced by the 45% decrease in favorited apartments on the RentCafé platform.

Atlanta

Atlanta has consistently been one of the South's major employment and rental hubs in recent years, attracting residents from major cities around the country because of its more affordable rental options. RentCafé shows a consistently high search volume.

Though popularly known as a hub for hip-hop and R&B artists and professional athletes, Atlanta houses the biggest film industry in the U.S. thanks to Georgia state tax credits and incentives for film and video production that were enacted in 2005. These have been attracting multiple A-list celebrities and people working in the film business in recent years.

Atlanta is also a major tech hub, with higher education institutions such as Georgia Tech propelling it to the nation's No. 4 city for tech talent diversity. Apple, Amazon, IBM, and AT&T all have a major presence there, earning the city the moniker "the tech hub of the South."

Cincinnati

Another Midwestern city, Cincinnati, makes RentCafé's end-of-year list for the same reasons as many of the other nearby cities—affordability and a higher quality of life. Apartments here are drawing in residents from Chicago and Columbus, Ohio. In addition, Cincinnati enjoys a wealth of educational institutions and a robust medical industry. 

Chicago

As a major American city, Chicago is generally more expensive than many cities on the list for renters, but good job opportunities (financial institutions and tech startups) and affordability compared to New York and Los Angeles are a big reason for people to move here. Though the inner city has received a bad rep recently, the suburbs are booming and established educational institutions such as the University of Chicago and Northwestern University are consistent draws.

Philadelphia

Philly's multifamily construction boom started in 2021 and continues today, thanks to the expiring city tax abatement on new multifamily construction, which required developers to pull permits by 2021. However, it is likely to abate in 2025.

The abundance of affordable apartments close to major employment hubs in New Jersey and New York, fueled by remote and hybrid working, has made the City of Brotherly Love a major attraction for renters. Healthcare and education remain pivotal to Philadelphia's economy. Institutions like Thomas Jefferson University and Children's Hospital of Philadelphia are at the forefront of innovation and research.

RentCafé data shows that rather than looking for apartments on listing sites, many prospective tenants prefer to contact the buildings directly, hinting that the rental base knows specifically what they want.

Indianapolis

According to RentCafé, Indianapolis' rent is a sizable 27% below the national benchmark. This, coupled with low unemployment, educational opportunities, job opportunities in tech and manufacturing, and a generally laid-back, genial atmosphere—despite unpredictable weather—make Indianapolis a popular rental city.

Los Angeles

It might be surprising to see LA here, considering California's housing crisis. However, real estate prices, coupled with high interest rates, have made LA a renter hot spot. There are plenty of high-paying jobs in tech, healthcare, and the entertainment industry to attract New Yorkers and other Californians to the city. 

Final Thoughts

By cross-referencing the RentCafé report with other end-of-year rental reports, such as the October report from the Bank of America Institute, it's possible to get an overall view of the most popular places to rent in the U.S. Generally, the Sunbelt and Midwestern cities in Ohio and Indiana are permanent fixtures. All reports show a net outflow from pricey metropolises such as New York, LA, Boston, and San Francisco. 

"Consumers would rather pack their bags than pay a higher rent, and that can play out in two ways," Joe Wadford, an economist at the Bank of America Institute, told CNBC Make It. "The first is moving to a less expensive city, and then there's a rising share of people who are saving money and playing it safe by downgrading within the same city."

With interest rates and the economy still wildly uncertain in 2025, tenants are looking to batten down the hatches and minimize rent while maximizing earning potential. Landlords, take note.

Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.