This could be the year of the renter as interest rates, rising housing prices and inflation continue to challenge prospective homeowners.
While homeowner hopefuls may have to wait for a house in their price range, renters in the Midwest live in a region with the lowest rent in the U.S., which may sustain as the market fluctuates. The federal government considers 12 states as "."
Across the board, rental prices have ticked up, but according to Realtor.com, the Midwest still boasts the cheapest median rent at $1,450 a month. The median rent in the South is roughly $1,600 a month, while renters in the West pay roughly $1,950 and renters in the Northeast pay $2,450.
According to Realtor.com鈥檚 data, Kansas City had the highest rate of rent growth in Midwestern cities, at 3.1% in December. St. Louis saw a 1.3% increase in rent during the same period.
In December, at the state level, Nebraska saw the highest rate of growth in rent prices in the Midwest, at 10.8%, while Missouri saw rent growth of 6%.
Regardless of rates creeping up, however, the region is still relatively affordable.
鈥淭he Midwest is more affordable for renters than the other regions of the country, which probably doesn鈥檛 come as a huge surprise,鈥� said Joel Berner, a senior economist with Realtor.com.
He added that the overall rate of rent increases in the region recently stalled and even fell by 1.4% in December.
鈥淲e鈥檝e kind of reached a sort of a balance point where those prices have stopped increasing and they鈥檝e stopped increasing at a place that鈥檚 lower than the national median,鈥� Berner said.
Saving by renting
Daryl Fairweather, said the Midwest is the hottest housing market in the country.
鈥淓verywhere else got really expensive during the pandemic, including the South, and now the Midwest is one of the only affordable regions left,鈥� Fairweather said. 鈥淧eople are starting to realize that and buy homes there.鈥�
According to a recent report from Redfin.com, between December 2023 and December 2024.
Kansas City saw home prices rise by 9% from 2023-2024 while St. Louis saw home prices rise by 8.5% from 2023 to 2024. That鈥檚 compared to a 6.3% increase in the median home price nationwide.
That same report noted that, collectively, home values in the Midwest are rising at a rate higher than in any other region in the country.
Berner said renters might currently have the upper hand on prospective buyers due to the housing market in the Midwest. The general affordability of rent makes for a good environment to save for a house, he added.
鈥淚n a lot of places right now, renting is easier to do,鈥� Berner said. 鈥淚f you can find a place like an affordable Midwestern market to live for a couple years, save up some cash and have a larger down payment when you do want to buy a home, that鈥檚 going to be really effective in this high mortgage rate environment.鈥�
Record low interest and mortgage rates during the pandemic, combined with affordable housing in the Midwest, created a housing 鈥渃raze鈥� in the region. Berner said the Midwest is rebounding from that era, which makes for difficult terrain for homebuyers.
鈥淭he Midwest is picking up because of how affordable it is, and so that鈥檚 kind of a double-edged sword,鈥� he said. 鈥淚t鈥檚 affordable, so people want to buy it 鈥� and that drives prices up 鈥� and then it鈥檚 not affordable again.
According to the , the median age of first-time home buyers increased nationally from 35 to 38 in 2024. Berner said that鈥檚 a troubling sign for young first-time homebuyers.
The main factor driving that jump in age, Berner said, is a mixture of high interest rates and difficulty financing their purchases.
鈥淔irst-time home buyers who don鈥檛 have equity built up in a previous home to sell and then transfer into their new purchase are having to finance large portions of their home purchase,鈥� Berner said.
Rent now, buy later
Prospective buyers aren鈥檛 out of luck, however. According to Realtor.com data, housing inventory is trending toward pre-pandemic levels.
鈥淭hat鈥檚 going to give buyers more options and more leverage to be able to go and make a purchase,鈥� Berner said.
David Nall, a St. Louis realtor with , said people who hope to buy a home should study the market and know what they鈥檙e looking for so they can strike when the right home becomes available.
鈥淚f something comes on that fits their criteria and it really excites them, it鈥檚 probably going to excite a lot of other buyers as well,鈥� Nall said.
Nall said prospective buyers can take steps to make a competitive offer if they have the financing, including waiving contingencies on the sale, offering a larger deposit or being flexible on a closing date.
Renting while saving for that down payment could be helpful for some house hunters in the meantime.
鈥淭here are lots of nuances, in my opinion, to crafting a competitive offer,鈥� he said. 鈥淚t鈥檚 not just the price and it鈥檚 not just the closing date.鈥�
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METHODS
To tell this story, reporter Kavahn Mansouri spoke with real estate analysts about the trends they鈥檙e seeing in the housing market heading into 2025 and with one St. Louis-based realtors experiences with his clients in the current market. He reviewed data about housing prices and rental costs from several sources.
REFERENCES
TYPE OF ARTICLE
News: Based on facts, either observed and verified firsthand by the reporter, or reported and verified from knowledgeable sources.
