Maybe this will surprise you, and maybe it won’t. It certainly gives us something to think about as St. Louis property managers and real estate investors.
St. Louis saw the second largest increase in rental rates across the U.S. over the last year.
Recent data and startling media reports have shown us what many of us in the industry have suspected all along: the St. Louis rental market is getting expensive. Rents are higher. So is demand.
According to findings published by Rent.com, the median rent in St. Louis rose more than 17% over the last year; the average rent is about $320 higher than it was last year.
If you think the 17% number is shocking, the U.S. Department of Housing and Urban Development (HUD) is reporting a 21% increase in the St. Louis metro area.
What can you do with this information, as a St. Louis rental property owner? And, what does it mean for our market?
St. Louis Rents Compared to Other U.S. Cities
Before we get too alarmed about high rents, it’s important to understand that while rents have risen dramatically in our market, the average rent in St. Louis is still relatively low.
For example, the national median rent is between $1,563 per month and $1,739, depending on the data sources you use (we checked Apartments.com and RentCafe). According to those same sources, St. Louis has an average rent of $1,083 to $1,240.
It’s still an affordable market, although a lot of economic experts will tell you that local wages have not kept pace with the higher rents.
That doesn’t mean there isn’t demand. The number of available rental units in St. Louis dropped about 7% during this time period, according to Rent.com. A larger number of residents are competing for a decreased number of rental units, pushing those prices higher.
Here’s a quick look at how St. Louis compares to other Midwestern cities:
St. Louis: $1,240 monthly rent (higher average)
Chicago: $2,349
Cincinnati: $1,348
Indianapolis: $1,221
Grand Rapids: $1,506
The only city to see rents jump higher than St. Louis over the last year is Providence, Rhode Island.
St. Louis Rental Pricing Strategies
How should you be pricing your property knowing that St. Louis has seen such a jump?
First, recognize the value of your investment. You are smart to be renting out a home right now. If you are thinking about acquiring another property, considering a first-time investment, or looking for a new real estate market from outside of this area, buying rental units in St. Louis is an excellent idea, and not only because rents are going up.
Next, study the nuances of your neighborhood and decide how your property fits into the market. Are you making upgrades that will boost your rent higher?
Finally use the data and the insights of a St. Louis property management professional to price your property in a way that’s competitive, accurate, and profitable.
When it comes time for renewal, it’s crucial to adjust your rental rates to reflect current market conditions. Your residents, aware of rising rental costs, will likely renew their lease if your renewal rate is competitive. Our experienced property managers at Deca Property Management are experts in determining optimal rental rates based on market conditions. By carefully balancing rent increases with resident retention, we can help you maximize your rental income while minimizing resident turnover.
Let’s discuss how we can help you achieve this. Contact us today.
