St. Louis and Minneapolis have long been known as reliable lower-cost alternatives to Chicago — but in September, both cities posted rent increases even as the U.S. rental market continued to cool, according to Realtor.com.
The shift is relatively modest, but it suggests that some of the country’s once-dependable “affordability refuges,” as Realtor.com called them, are becoming more expensive.
Here’s what to know
National rents kept inching down in September, but that was not true everywhere.
The U.S. median asking rent for studio- to two-bedroom properties was $1,694, down 0.4% from a year earlier and marking the 38th consecutive month of annual declines, per Realtor.com.
Several major metro areas, however, moved in the opposite direction.
Chicago appears to be a major source of that pressure in the Midwest. The city’s median asking rent rose 2.3% year over year to a record $1,909. Nearly half of St. Louis’ out-of-market rental demand came from Chicago, and Minneapolis got roughly a quarter from there.
That translated into higher rents in both neighboring markets.
In St. Louis, zero- to two-bedroom asking rents rose 2% to $1,300, while Minneapolis increased 1.7% to $1,509.
Both cities have appeared on the annual Chapman University Center for Demographics and Policy list of the world’s 10 most affordable cities.
More background
Similar spillover patterns are appearing beyond the Midwest.
About 50% of out-of-market rental interest in Riverside, California, came from Los Angeles. Las Vegas got 31%.
For renters arriving from those pricier cities, the destination markets can still look like bargains. Los Angeles had a median asking rent of $2,851 despite a 1.1% annual decline, compared with $2,104 in Riverside and $1,473 in Las Vegas.
The median asking rent in Washington, D.C., was $2,258, while Virginia Beach came in at $1,539. Daniel Yoon, a real estate adviser with eXp Realty, described Virginia Beach newcomers.
“They’re used to paying Northern Virginia prices, so a rent that looks high to a local can look like a deal to them,” Yoon explained.
Not all rent growth is tied to spillover demand alone. Detroit saw a 6.6-percentage-point upswing tied to AI investment, reduced inventory, and renters arriving from New York, Chicago, and Washington, D.C.
What can be done?
For some renters, one response is to reconsider whether renting still makes financial sense.
Yoon observed that tenants in Virginia Beach facing annual increases often start “doing the math” on buying instead.
“Renters aren’t winning a lot of negotiations, so they look for a way out of the cycle,” he said.
Read More: ‘Affordability refuges’ hit by rent increases as tenants in major cities
