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

RankMetroAvg Rental RateAvg Home ValueAvg Annual Gross Yield
1Brownsville-Harlingen Metro$930 $94,000 11.9%
2Binghamton Metro$1,001 $118,000 10.2%
3Syracuse Metro$1,121 $134,800 10.0%
4New Orleans-Metairie Metro$1,444 $175,600 9.9%
5Rochester Metro$1,157 $141,800 9.8%
6Rockford Metro$909 $114,500 9.5%
7Corpus Christi Metro$1,133 $151,800 9.0%
8Youngstown-Warren-Boardman Metro$632 $87,300 8.7%
9Macon-Bibb County Metro$804 $113,200 8.5%
10Jackson Metro$1,007 $142,400 8.5%
11Erie Metro$855 $121,400 8.5%
12El Paso Metro$864 $124,700 8.3%
13Davenport-Moline-Rock Island Metro$872 $126,700 8.3%
14Savannah Metro$1,196 $177,900 8.1%
15Fort Smith Metro$699 $105,400 8.0%
16Detroit-Warren-Dearborn Metro$1,053 $159,400 7.9%
17Lansing-East Lansing Metro$979 $148,200 7.9%
18Atlanta-Sandy Springs-Roswell Metro$1,399 $216,600 7.8%
19Buffalo-Cheektowaga-Niagara Falls Metro$1,015 $157,400 7.7%
20Chicago-Naperville-Elgin Metro$1,431 $224,200 7.7%
21Grand Rapids-Wyoming Metro$1,211 $189,900 7.7%
22Kalamazoo-Portage Metro$976 $153,200 7.6%
23Toledo Metro$713 $112,200 7.6%
24Mobile Metro$760 $119,700 7.6%
25Tuscaloosa Metro$973 $153,600 7.6%
26Gulfport-Biloxi-Pascagoula Metro$819 $131,000 7.5%
27Atlantic City-Hammonton Metro$1,150 $184,200 7.5%
28Lincoln Metro$1,129 $181,500 7.5%
29Duluth Metro$919 $148,100 7.4%
30Cleveland-Elyria Metro$899 $145,000 7.4%

Bottom 30 Rental Markets in the U.S. by Avg. Gross Rental Yield

RankMetroAvg Rental RateAvg Home ValueAvg Annual Gross Yield
1San Jose-Sunnyvale-Santa Clara Metro$2,539 $1,253,500 2.4%
2Urban Honolulu Metro$1,751 $684,700 3.1%
3San Francisco-Oakland-Hayward Metro$2,734 $962,300 3.4%
4Boulder Metro$1,581 $532,300 3.6%
5Stockton-Lodi Metro$1,135 $362,000 3.8%
6Santa Cruz-Watsonville Metro$2,607 $830,800 3.8%
7San Diego-Carlsbad Metro$1,879 $592,700 3.8%
8Ogden-Clearfield Metro$976 $306,400 3.8%
9Oxnard-Thousand Oaks-Ventura Metro$1,918 $601,500 3.8%
10Reno Metro$1,158 $362,200 3.8%
11San Luis Obispo-Paso Robles-Arroyo Grande Metro$1,972 $605,000 3.9%
12Fort Collins Metro$1,239 $376,200 4.0%
13Los Angeles-Long Beach-Anaheim Metro$2,201 $650,200 4.1%
14Las Vegas-Henderson-Paradise Metro$944 $278,000 4.1%
15Fresno Metro$850 $248,200 4.1%
16Modesto Metro$1,067 $307,000 4.2%
17Salt Lake City Metro$1,241 $356,300 4.2%
18Boise City Metro$965 $274,900 4.2%
19Sacramento–Roseville–Arden-Arcade Metro$1,429 $406,900 4.2%
20Riverside-San Bernardino-Ontario Metro$1,294 $365,400 4.2%
21Chico Metro$1,026 $289,100 4.3%
22Seattle-Tacoma-Bellevue Metro$1,734 $488,400 4.3%
23Merced Metro$933 $262,200 4.3%
24College Station-Bryan Metro$736 $204,000 4.3%
25Denver-Aurora-Lakewood Metro$1,459 $403,600 4.3%
26Anchorage Metro$1,193 $327,100 4.4%
27Santa Rosa Metro$2,308 $632,700 4.4%
28Bakersfield Metro$791 $215,400 4.4%
29Yakima Metro$808 $217,300 4.5%
30Vallejo-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. Higher paying jobs and more people are expected to move into these markets.

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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