Using the latest Home Values and Rental data from Zillow (as of December 31, 2018), I’ve ranked 171 U.S. cities based on their average gross rental yields, which measures the relationship between the gross rent and the value of rental properties.
If you’re not familiar with this metric and wish to learn more, read my previous post on the topic here.
Top 30 Rental Markets in the U.S. by Avg. Gross Rental Yield
| Rank | Metro | Avg Rental Rate | Avg Home Value | Avg Annual Gross Yield |
| 1 | Brownsville-Harlingen Metro | $930 | $94,000 | 11.9% |
| 2 | Binghamton Metro | $1,001 | $118,000 | 10.2% |
| 3 | Syracuse Metro | $1,121 | $134,800 | 10.0% |
| 4 | New Orleans-Metairie Metro | $1,444 | $175,600 | 9.9% |
| 5 | Rochester Metro | $1,157 | $141,800 | 9.8% |
| 6 | Rockford Metro | $909 | $114,500 | 9.5% |
| 7 | Corpus Christi Metro | $1,133 | $151,800 | 9.0% |
| 8 | Youngstown-Warren-Boardman Metro | $632 | $87,300 | 8.7% |
| 9 | Macon-Bibb County Metro | $804 | $113,200 | 8.5% |
| 10 | Jackson Metro | $1,007 | $142,400 | 8.5% |
| 11 | Erie Metro | $855 | $121,400 | 8.5% |
| 12 | El Paso Metro | $864 | $124,700 | 8.3% |
| 13 | Davenport-Moline-Rock Island Metro | $872 | $126,700 | 8.3% |
| 14 | Savannah Metro | $1,196 | $177,900 | 8.1% |
| 15 | Fort Smith Metro | $699 | $105,400 | 8.0% |
| 16 | Detroit-Warren-Dearborn Metro | $1,053 | $159,400 | 7.9% |
| 17 | Lansing-East Lansing Metro | $979 | $148,200 | 7.9% |
| 18 | Atlanta-Sandy Springs-Roswell Metro | $1,399 | $216,600 | 7.8% |
| 19 | Buffalo-Cheektowaga-Niagara Falls Metro | $1,015 | $157,400 | 7.7% |
| 20 | Chicago-Naperville-Elgin Metro | $1,431 | $224,200 | 7.7% |
| 21 | Grand Rapids-Wyoming Metro | $1,211 | $189,900 | 7.7% |
| 22 | Kalamazoo-Portage Metro | $976 | $153,200 | 7.6% |
| 23 | Toledo Metro | $713 | $112,200 | 7.6% |
| 24 | Mobile Metro | $760 | $119,700 | 7.6% |
| 25 | Tuscaloosa Metro | $973 | $153,600 | 7.6% |
| 26 | Gulfport-Biloxi-Pascagoula Metro | $819 | $131,000 | 7.5% |
| 27 | Atlantic City-Hammonton Metro | $1,150 | $184,200 | 7.5% |
| 28 | Lincoln Metro | $1,129 | $181,500 | 7.5% |
| 29 | Duluth Metro | $919 | $148,100 | 7.4% |
| 30 | Cleveland-Elyria Metro | $899 | $145,000 | 7.4% |
Bottom 30 Rental Markets in the U.S. by Avg. Gross Rental Yield
| Rank | Metro | Avg Rental Rate | Avg Home Value | Avg Annual Gross Yield |
| 1 | San Jose-Sunnyvale-Santa Clara Metro | $2,539 | $1,253,500 | 2.4% |
| 2 | Urban Honolulu Metro | $1,751 | $684,700 | 3.1% |
| 3 | San Francisco-Oakland-Hayward Metro | $2,734 | $962,300 | 3.4% |
| 4 | Boulder Metro | $1,581 | $532,300 | 3.6% |
| 5 | Stockton-Lodi Metro | $1,135 | $362,000 | 3.8% |
| 6 | Santa Cruz-Watsonville Metro | $2,607 | $830,800 | 3.8% |
| 7 | San Diego-Carlsbad Metro | $1,879 | $592,700 | 3.8% |
| 8 | Ogden-Clearfield Metro | $976 | $306,400 | 3.8% |
| 9 | Oxnard-Thousand Oaks-Ventura Metro | $1,918 | $601,500 | 3.8% |
| 10 | Reno Metro | $1,158 | $362,200 | 3.8% |
| 11 | San Luis Obispo-Paso Robles-Arroyo Grande Metro | $1,972 | $605,000 | 3.9% |
| 12 | Fort Collins Metro | $1,239 | $376,200 | 4.0% |
| 13 | Los Angeles-Long Beach-Anaheim Metro | $2,201 | $650,200 | 4.1% |
| 14 | Las Vegas-Henderson-Paradise Metro | $944 | $278,000 | 4.1% |
| 15 | Fresno Metro | $850 | $248,200 | 4.1% |
| 16 | Modesto Metro | $1,067 | $307,000 | 4.2% |
| 17 | Salt Lake City Metro | $1,241 | $356,300 | 4.2% |
| 18 | Boise City Metro | $965 | $274,900 | 4.2% |
| 19 | Sacramento–Roseville–Arden-Arcade Metro | $1,429 | $406,900 | 4.2% |
| 20 | Riverside-San Bernardino-Ontario Metro | $1,294 | $365,400 | 4.2% |
| 21 | Chico Metro | $1,026 | $289,100 | 4.3% |
| 22 | Seattle-Tacoma-Bellevue Metro | $1,734 | $488,400 | 4.3% |
| 23 | Merced Metro | $933 | $262,200 | 4.3% |
| 24 | College Station-Bryan Metro | $736 | $204,000 | 4.3% |
| 25 | Denver-Aurora-Lakewood Metro | $1,459 | $403,600 | 4.3% |
| 26 | Anchorage Metro | $1,193 | $327,100 | 4.4% |
| 27 | Santa Rosa Metro | $2,308 | $632,700 | 4.4% |
| 28 | Bakersfield Metro | $791 | $215,400 | 4.4% |
| 29 | Yakima Metro | $808 | $217,300 | 4.5% |
| 30 | Vallejo-Fairfield Metro | $1,635 | $437,100 | 4.5% |
Source: Zillow Rental and Home Value Indexes as of Dec 31, 2019
All things equal, if you’re looking for a rental market where you’re most likely to get the best rental yield, your chances are better by looking in the top 30 markets above, whose average gross rental yield is 2.1x higher than that of the bottom 30 markets (8.4% vs 4.0% respectively).
That means on average, the top 30 markets are generating TWICE the rents for every dollar of property value compared to their bottom 30 counterparts.
So what does that mean? Only look for rental properties in the top 30 markets? No!
While these charts are a useful starting point to compare rental markets, they leaves out some very important factors.
They say nothing about broader market factors in each rental market
There is a reason why the worst yielding markets are that way–they have very high home values versus the rental rates.
And the reason they have very high home values is due to strong demand. People want to live there and are willing to pay a premium to do so.
These markets tend to also have the most robust job markets and have the strongest long term demographic and economic outlooks. H
They blend and mask important local factors within each rental market
Within each metro, there will be significant differences between different rental neighborhoods.
These broad figures say nothing about local factors such as school quality, crime rates, air quality, traffic, access to public transit, and any other factors that impact the quality of life for local residents.
All of these influence the attractiveness of specific neighborhoods for renters and homebuyers alike.
Were there any surprises? How would you use this information?
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