NEWS: Sun Belt, Coastal U.S. Cities Multifamily Rent Gaps Narrow in 2022

Over decades the pricing gap between rental prices of properties in coastal cities and Sun Belt markets has been quite significant. Although that gap has been decreasing over the years since 2012 there has been a significant drop.
In 2012 the pricing per sq. ft. was 63% lower than the average coastal market rent. Today, the average Sun Belt apartment rent is 24% higher than its pre-pandemic level in Q1 2020, compared with a 7% increase for the coastal market average. Now the gap between the two markets is about 50% with most of its decline happening just over the past 2 years.

According to recent findings by the global property consultant CBRE,

“The rise in both income and rents has maintained a relatively consistent rent-to-income ratio of approximately 25% for Sun Belt markets during the pandemic. Renters are typically considered "cost burdened" if rent accounts for 30% or more of their gross household income. For coastal markets, when average renter income declined between Q1 2020 and Q1 2021, the average rent-to-income ratio initially came close to 30%. However, as income growth resumed in Q2 2021 alongside only moderate rental rate increases, coastal rent-to-income ratios fell more in line with Sun Belt ratios.”

As we all have faced the consequences of the pandemic, this decrease in the pricing gap between Sun Belt and Coast Cities markets is a relevant fact to keep an eye for. However, there is still room for finding affordability in the Sun Belt markets.