Looking for a deal? Too bad. Rents rise the fastest in the cheapest real estate markets

People used to be able to reliably find cheap rent in large swaths of the Midwest and South. But those deals fade quickly.
In most of the country, monthly rents are still rising — though not nearly as much as they did during the height of the housing frenzy of the COVID-19 pandemic. Nationally, rents rose 3.1% year-over-year in February to $1,716 a month in the 50 largest metropolitan areas, according to the latest Realtor.com® report. But rents are rising much faster in some of the more affordable areas of the country.
Rents rose in places like Indianapolis, where they rose 11.8%; Oklahoma City, which saw a 10.9% jump; and Birmingham, Alabama, where there was a 9.4% year-over-year increase.
"Some of that discount advantage has eroded from these markets over the past few years," says George Razio, Realtor.com's senior economist.
(The report looked at studio, one-bedroom, and two-bedroom units listed on Realtor.com in February. Apartments, townhomes, and single-family homes were included.)
Too many Americans are struggling to afford housing. And the problem is getting worse, especially in areas of the country where renters can least afford the trip. High housing costs eat up more of the typical household's budget. In February, the average household spent 25.3% of its income on rent, compared to 24.8% in February 2022.
This has led many Americans to relocate in search of a lower cost of living. The result of new residents moving to more convenient areas is that rents in those places have gone up. The fastest rent growth is often in medium-sized, traditionally cheaper metros in the Midwest and South.
Even so, these metro areas remain more affordable than many coastal areas. Oklahoma City topped the list of cheapest areas in February, requiring 17.4 percent of the median income to generate a median rent price of $980 per month.
And it seems that the days of double-digit rent growth have subsided.
"We see the rents cooling down," says Razio. "I see this as good news for many tenants who were really between a rock and a hard place."

Why rents are jumping in New York

New York City is the exception to the trend of rising rents in cheaper real estate markets. Rents jumped the most in the far-from-cheap metro area, up 12.2% year-over-year for a median of $2,895 a month, much to the chagrin of struggling renters.
At the start of the pandemic, many people left crowded metro areas, taking advantage of the opportunity to work from home in sunnier, more spacious or less expensive areas. But that trend has reversed as renters return to the big city, says Jonathan Miller, a national real estate appraiser.
Regardless of where their jobs are located, people "want to be in Manhattan or other parts of the city," says Miller.
Challenges for would-be home buyers also drive up rents. Some people who can't afford to buy a home because of higher mortgage rates rent instead for longer. This additional demand keeps rents high.
"New York is one of those cities that people love to be in," says Nikki Thomas, a New York real estate agent with Corcoran. "Although some of our business districts have been hit hard, the other neighborhoods that have all kinds of amenities - like fun restaurants and bars and cute shops - are thriving. New York will always be a draw."