Time for some US rental housing market news March edition. In this article, we will go over some important areas of rental property investing.
Before we get into all of them, let’s go over some general updates on the latest news for the US rental housing market as of March 2023. As a real estate investor, you should pay attention to what’s going on in the real estate market, both on a national and local level. It will help you anticipate and prepare for upcoming events and the challenges they bring.
Regaining a Sense of Normalcy
After nearly two years of a wild roller coaster ride, the real estate market seemed to have hit some sort of stability and pre-pandemic normalcy going into the new year. As of March 2023, a lot of markets have become buyer-friendly again, despite sellers still holding a lot of cards.
In a news report from Yahoo Finance, Homelister CEO and co-founder Lindsay McClean remarked:
”As mortgage rates rise and affordability dips, sellers may have to shift their expectations to match the changing market — and buyers [will] have more leverage.”
In addition, McClean said that the housing market would assume a more balanced position compared to previous years. However, plenty of sellers still hold low-rate mortgages and are in no hurry to sell, she added. It puts them in a position to hold out for offers that line up with their targets.
In a similar sentiment, Inglewood, CA-based WLM Realty and Co. CEO Odest Riley said this is the year that regular hard-working people can get back into the real estate game. He shared:
“From April 2020 to March 2022, sellers were able to put their properties on the market, kick their feet up and wait for a buyer to beg them to accept an offer.”
Time’s up for them, Riley added.
According to the chief executive, first-time home buyers will be welcomed into the market with their FHA loans and will ultimately realize that a 5% rate isn’t really bad. He believes that 2023 will be a year of corrections for the US rental housing market.
The Latest on the Housing Inventory
One of the many concerns of real estate professionals, investors, and property buyers as of late is housing supply.
As of February 2023, the active listing count in the US housing market was 577,972, down from 615,805 in January. However, in a separate report from the National Association of Realtors (NAR), the total housing inventory in the US increased to 980,000s from December’s 970,000s.
The figure is more in line with McClean’s statement that the active listing count is all over the place. She said that some areas reported nearly twice as many listings in December. However, others were down 25% or more during the same period.
Despite the decline, she believes that inventory will continue to increase from March 2023 to the next few months, especially after mortgage rates stabilize.
Top 10 Cities in the US With the Highest Number of Listings
We checked out Mashvisor’s March 2023 report to see which locations report the most active listings. Here are the cities that showed up as the top ten in our database:
- New York, NY: 3,551
- Las Vegas, NV: 3,039
- San Antonio, TX: 2,910
- Miami, FL: 2,207
- Philadelphia, PA: 1,871
- Chicago, IL: 1,817
- Atlanta, GA: 1,778
- Cape Coral, FL: 1,399
- Dallas, TX: 1,223
- Tampa, FL: 762
As of publishing date, users can find 3,551 investment properties for sale in New York, NY.
The Latest on Property Prices
Now, as for property prices, we also witnessed how things got really crazy, especially during the last quarter of 2021 to mid-2022. The low property prices during the pandemic caused investors to come out of the woodwork into a buying frenzy.
Because of the then-sudden demand for rental properties, home sellers started to raise their asking prices, hoping to get the most out of the situation. The trend stayed for months as we saw property prices go on a meteoric rise. The rate at which property prices went up raised some alarm among real estate professionals who anticipated a housing bubble burst.
The good thing is that by mid-2022, the real estate markets started cooling down. Mind you, prices in a lot of areas still went up but at a far slower rate than they did in the previous year. On the other hand, some areas saw property prices go down.
As of March 2023, industry insiders and professionals are still uncertain whether prices will continue to go down or not. While property prices are down from their peaks in 2022, they are still higher than the prices in 2021, which still poses a problem to folks wanting to buy a property.
McClean added:
“Mortgage rates have stabilized a bit in December and offer activity seems to be resuming, as buyers are slowly coming back to the table.”
Top 10 Cities in the US With the Most Affordable Homes
We also looked at what Mashvisor’s March 2023 report says about median property prices. After sorting through thousands of markets, we’ve listed below the top ten most affordable rental housing markets:
- Smith, PA: $71,580
- Christopher, IL: $73,660
- Claysburg, PA: $77,822
- Monessen, PA: $92,217
- Wood River, IL: $92,988
- Parsons, KS: $96,466
- Hampton, IA: $97,950
- Centralia, IL: $100,850
- Highland Park, MI: $101,057
- Rock Falls, IL: $102,450
The Latest on Mortgage Rates
Let’s take a look at news about mortgage rates for a minute.
McClean’s statement about mortgage rates stabilizing is true. It doesn’t mean that it’s back to the 3%-mark that we experienced earlier in the pandemic.
Freddie Mac gives us the news that the year started with rates on a 30-year fixed-rate mortgage going down with expectations of slower economic growth and inflation, as well as monetary policies loosening. However, because of sustained economic growth, along with high inflation rates, mortgage rates are once again past the 7%-mark.
According to Bankrate, the rates for a 30-year fixed mortgage for March 9, 2023 went up by 8 basis points in a week to 7.11%. The rate for a 30-year fixed refinance, on the other hand, went down by 3 basis points in the last seven days to 7.08%.
Forbes shows us similar rates for the following:
- 30-year fixed-rate mortgage: 7.18%
- 15-year fixed-rate mortgage: 6.28%
- 30-year Jumbo: 7.28%
- 5/1 ARM: 5.81%
If you’re looking to break into the US rental housing market, mortgage rates are one thing you need to look closely into. A mortgage calculator will come in handy to see whether a particular investment property is worth buying or not.
The good thing is Mashvisor provides a mortgage calculator function in its rental property calculator. The tool allows you to make realistic computations and projections on your return on investment.
To find out more about Mashvisor’s tools to locate the best deals in the most profitable markets, schedule a demo now.
Top 5 Long Term Rental Markets in the US as of March 2023
As we enter into a post-pandemic era, we see that a lot of companies still employ remote work arrangements for their employees. Even as societies go back to pre-pandemic norms, the work-from-home trend that became widespread during the pandemic is not going away any time soon.
It is something that real estate investors should keep up with, especially where technology is concerned. Many renters and tenants not only look for properties that offer more space, but they also seek high-tech long term rentals.
Individuals are now seeking homes that will give them access to high-speed internet connections and smart home features that allow them to save time and money.
Another piece of news that you should be aware of is that while there was a short window late into the pandemic that caused people to move back into urban spaces, the trend’s already reversed. Due to the higher costs of living caused by inflation, people are once again looking for more affordable homes outside of urban centers. If you sleep on the said news, you might end up looking for investment properties in the wrong places.
That being said, here are the top long term rental markets in the US according to Mashvisor’s March 2023 data. The list below is ranked from the highest to the lowest cash on cash return and filtered using the following criteria:
- A median property price of no more than $1,000,000
- At least 100 active listings on the long term rental market
- Monthly long term rental income of $2,000 and above
- Minimum cash on cash return of 2.00%
- Price to rent ratio of 20 and up
1. North Miami, FL
- Median Property Price: $858,896
- Average Price per Square Foot: $486
- Days on Market: 150
- Number of Long Term Rental Listings: 315
- Monthly Long Term Rental Income: $3,399
- Long Term Rental Cash on Cash Return: 4.33%
- Long Term Rental Cap Rate: 4.40%
- Price to Rent Ratio: 21
- Walk Score: 52
2. Savannah, GA
- Median Property Price: $506,726
- Average Price per Square Foot: $320
- Days on Market: 74
- Number of Long Term Rental Listings: 373
- Monthly Long Term Rental Income: $2,117
- Long Term Rental Cash on Cash Return: 3.69%
- Long Term Rental Cap Rate: 3.75%
- Price to Rent Ratio: 20
- Walk Score: 72
3. Stuart, FL
- Median Property Price: $754,015
- Average Price per Square Foot: $387
- Days on Market: 78
- Number of Long Term Rental Listings: 412
- Monthly Long Term Rental Income: $3,010
- Long Term Rental Cash on Cash Return: 3.42%
- Long Term Rental Cap Rate: 3.46%
- Price to Rent Ratio: 21
- Walk Score: 46
4. Wilmington, NC
- Median Property Price: $513,033
- Average Price per Square Foot: $405
- Days on Market: 71
- Number of Long Term Rental Listings: 133
- Monthly Long Term Rental Income: $2,150
- Long Term Rental Cash on Cash Return: 3.35%
- Long Term Rental Cap Rate: 3.40%
- Price to Rent Ratio: 20
- Walk Score: 30
5. Virginia Beach, VA
- Median Property Price: $506,109
- Average Price per Square Foot: $323
- Days on Market: 50
- Number of Long Term Rental Listings: 1,767
- Monthly Long Term Rental Income: $2,089
- Long Term Rental Cash on Cash Return: 3.34%
- Long Term Rental Cap Rate: 3.39%
- Price to Rent Ratio: 20
- Walk Score: 21
Top 5 Short Term Rental Markets in the US as of March 2023
As for the vacation rental market, most insiders and professionals feel very optimistic about the industry, especially after the lifting of travel restrictions. Despite some economic challenges caused by high inflation rates, there are more reasons for vacation rental owners to stay positive and not be in despair.
As employment stays strong and public interest in travel continues to improve, the diverse experiences and affordability offered by short term rentals will continue to attract travelers. The positive outlook will also continue to draw investors to short term rentals as a preferred investment option compared to other avenues.
And while the growth may not be as fast as you would expect, it will continue to be steady for the next several months.
That said, we’ve listed five of the best markets suited for such type of investment. We looked at Mashvisor’s short term rental data from its March 2023 report and came up with the following cities. The list is ranked from highest to lowest cash on cash return and filtered using the following criteria:
- A median property price of no more than $1,000,000
- At least 100 active listings on the short term rental market
- Monthly short term rental income of $2,000 and above
- Minimum cash on cash return of 2.00%
- An occupancy rate of 50% and up
1. Northlake, IL
- Median Property Price: $323,180
- Average Price per Square Foot: $217
- Days on Market: 139
- Number of Short Term Rental Listings: 120
- Monthly Short Term Rental Income: $4,269
- Short Term Rental Cash on Cash Return: 8.29%
- Short Term Rental Cap Rate: 8.44%
- Short Term Rental Daily Rate: $171
- Short Term Rental Occupancy Rate: 53%
- Walk Score: 33
2. Columbia Heights, MN
- Median Property Price: $294,482
- Average Price per Square Foot: $142
- Days on Market: 22
- Number of Short Term Rental Listings: 314
- Monthly Short Term Rental Income: $3,724
- Short Term Rental Cash on Cash Return: 8.06%
- Short Term Rental Cap Rate: 8.21%
- Short Term Rental Daily Rate: $158
- Short Term Rental Occupancy Rate: 58%
- Walk Score: 82
3. Bridgeton, MO
- Median Property Price: $264,711
- Average Price per Square Foot: $136
- Days on Market: 23
- Number of Short Term Rental Listings: 120
- Monthly Short Term Rental Income: $3,291
- Short Term Rental Cash on Cash Return: 7.69%
- Short Term Rental Cap Rate: 7.83%
- Short Term Rental Daily Rate: $154
- Short Term Rental Occupancy Rate: 58%
- Walk Score: 3
4. Rileyville, VA
- Median Property Price: $332,031
- Average Price per Square Foot: $192
- Days on Market: 15
- Number of Short Term Rental Listings: 155
- Monthly Short Term Rental Income: $3,733
- Short Term Rental Cash on Cash Return: 7.57%
- Short Term Rental Cap Rate: 7.69%
- Short Term Rental Daily Rate: $236
- Short Term Rental Occupancy Rate: 56%
- Walk Score: 10
5. Harahan, LA
- Median Property Price: $398,200
- Average Price per Square Foot: $209
- Days on Market: 57
- Number of Short Term Rental Listings: 111
- Monthly Short Term Rental Income: $4,022
- Short Term Rental Cash on Cash Return: 7.46%
- Short Term Rental Cap Rate: 7.57%
- Short Term Rental Daily Rate: $137
- Short Term Rental Occupancy Rate: 59%
- Walk Score: 56
Wrapping It Up
Keeping yourself up to date with the latest news will help you make wiser investment decisions. By becoming aware of the US rental housing market news for March, you can anticipate certain events and plan for them accordingly.
Of course, real estate investing can be a lot easier with the right tools. Mashvisor is your one-stop shop for the best real estate investing tools in the market today.
Get started on your 7-day free trial with Mashvisor today to get you on your way to a thriving real estate investing career.