TUSCALOOSA, Ala. — With college football beginning, fans hope to see teams from the Southeastern Conference rise in the rankings. Rents in each conference city are definitely on the rise, according to a monthly rental report from researchers at three universities.
Rent prices across the 14 cities hosting SEC institutions rose 8.22% on average over the past year, double the national average of 4.11% over the past 12 months ending in June, according to the Waller, Weeks and Johnson Rental Index that examines the entire stock of homes and apartments across 100 metro areas in the United States.
Despite the rise, the average monthly rent in the SEC cities in June is $1,541, well below the national average of $2,054. No city hosting an SEC institution has an average monthly rent costlier than the national average.
“Not only does the SEC offer great academics and athletic programs, but also provides an affordable rental market for students,” said Dr. Bennie Waller, the William Cary Hulsey Faculty Fellow in the UA Culverhouse College of Business and a research associate in the Alabama Center for Real Estate.
The Mississippi cities hosting the rivals in the Egg Bowl outpace the other SEC cities. Oxford and Starkville led the SEC in rent increases during the year, recording a 20% and a 14% hike, respectively. The next largest rent increase in the past year was Columbia, Missouri, with a 9.79% hike.
Oxford is also the most overpriced city in the SEC with rent nearly 16.5% more than would be expected based on long-term leasing trend that renters must pay. Rents typically increase only 3% to 5% a year.
“Rent in Oxford is wildly rising and becoming more expensive,” Waller said. “There’s less real estate and as a result, prices are sky-high.”
Baton Rouge, Louisiana, has the smallest yearly increase with rent through June not even rising a full percentage point.
Of SEC cities, the large metro area of Nashville, Tennessee, claims the costliest rent at $1,966. Columbia, Missouri, was the cheapest of the conference with an average rent of $1,083.
The average income needed in the SEC cities renters need annually to avoid rent becoming a financial burden is $61,635, which is lower than the national average. Consumers are rent-burdened when they spend 30% or more of their incomes on rent, lessening the ability to pay for other necessities.
The average rent in the United States of $2,054 requires an annual income of $82,156 to avoid being rent-burdened. According to the rental index, rent prices increased by .57% in June, marking the third-consecutive month where the increase was higher than .5%.
In SEC cities the average rent increased about .75% from May to June.
Waller and fellow researchers Dr. Ken H. Johnson, an economist in Florida Atlantic University’s College of Business, and Dr. Shelton Weeks, the Lucas Professor of Real Estate at Florida Gulf Coast University, recently added the rent-burdened metric to their monthly analysis of the most overvalued U.S. rental markets. They use leasing data from Zillow’s Observed Rental Index to determine existing rents and statistically model historical trends from 2014. Income information is taken from the Wisevoter project.
“Rents continue to increase at a pretty hefty rate,” Waller said. “The growth of rates may be slowing, but they are still increasing. Depending on what the Federal Reserve is going to do at the next meeting, if interest rates are going to go up again, which I do think they will, then I think mortgage rates are going to go up again. That’s just going to continue to exacerbate the rental markets.”
Complete interactive data for both the U.S. and Alabama can be found on the ACRE website.
Change in average rent from June 2022 to June 2023
Source: Waller, Weeks and Johnson Rental Index.