Most expensive rental markets

New York rents far surpass all other U.S. markets. California and New England cities vie for second place.

By Les Christie, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- New York City - and not just Manhattan - has by far the highest rents of any of the 52 major apartment rental markets around the nation, according to a report published Wednesday.

At year's end, the average estimated monthly rent for all of New York's five boroughs was $2,553, according to Marcus & Millichap, a real estate investment broker based in California. The average for the second most expensive city, San Francisco, was a comparative fire sale at $1,685.

10 Most expensive rental markets
Where you'll pay the most per month.
Area State Avg rent in 2006
New York NY $2,553
San Francisco CA $1,685
Boston MA $1,632
New Haven CT $1,485
Orange County CA $1,458
San Jose CA $1,445
N. New Jersey NJ $1,404
Los Angeles CA $1,360
Oakland CA $1,262
San Diego CA $1,250
Source: Marcus & Millchap
10 Least expensive markets
It's cheaper in the Midwest and the sun belt - outside California
Area State Avg rent in 2006
Tucson AZ $615
Columbus OH $642
Indianapolis IN $643
San Antonio TX $660
Salt Lake City UT $667
Kansas City MO $668
Cincinnati OH $675
Cleveland OH $711
Houston TX $724
Portland OR $740
Source: Marcus & Millchap

New Yorkers - and everyone else - shouldn't expect much better in 2007. Marcus & Millichap forecasts a 6.5 percent rise in the asking price of rents during the year in the New York and a 4.3 percent rise nationally.

In the three years that will end December 31, 2007, the company forecasts that the average rent in the United States will have increased by 14 percent, far faster that the rate of inflation.

Rents are up, in part, because of the slowdown in the housing markets. That has has kept potential home buyers in the rental market

The company also attributes the strength of the rental markets to the strong economy and job growth.

But the housing slowdown also led to the return of condos to the rental pool, according to the report. That has expanded the supply, which helped dampen what would otherwise be even larger rent increases.

Rental market, as measured by vacancy rates were weakest in Texas, where 10.1 percent of Houston's rental inventory was vacant and 9.3 percent of Dallas/Ft. Worth's.

New York City (2.7 percent) and Los Angeles (2.8 percent) reported vanishingly small vacancy rates.

Besides New York and San Francisco, other expensive areas include Boston, where rents average $1,632, New Haven ($1,485) and Orange County, Calif. ($1,458).

Bargains abounded in the Southwest and Midwest. In Tucson, the average rental apartment costs just $615. Columbus, Ohio ($642) and Indianapolis ($643) also boast bargains for renters.

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