Midwest Apartment Demand Outpaces Sun Belt As Rents Remain Firm

Midwest apartment demand has quietly become one of the strongest stories in U.S. housing, even as the national rental market cooled.​

RentCafe, using data from its sister apartment rental analytics provider, Yardi Matrix, listed Cincinnati as the top apartment market to watch this rental season. Minneapolis, Cleveland and Kansas City, Missouri, ranked in the top 10.​

Midwest momentum is expected to hold up this year. One factor may be Midwesterners returning after leaving during the COVID-19 pandemic for warmer climates and jobs. Federal Reserve Bank of Cleveland economists dubbed it “boomerang migration” last year.​

Midwest metro markets have posted steady rent gains over the past couple of years. Those gains came while rents fell or flattened in many Sun Belt metros. A massive pandemic-era wave of apartment construction – now slowly being absorbed in Sun Belt states – never reached the Midwest.​

Sun Belt construction stalled rent growth after it hit record levels. Developers added new supply, which eased pressure on rents.​

The for-sale market tells a similar story. Home sales across much of the Midwest moved at a slower, more constrained pace. Builders added new homes more actively in the Sun Belt.​

However, Midwest metros are expected to be among the hottest home sales markets this year.​

Industry analysts recognized the Midwest trend a year ago​

Midwest apartment resiliency entered industry discussions a year ago. Investors and analysts pointed to more consistent performance and deal flow.​

“Everyone’s always sleeping on Chicago, but Chicago’s been a really strong market,” Jay Parsons, an apartment industry economist, said on a Walker & Dunlop webcast last March.​

Parsons said rents can rise even in markets with little or no population growth. Much of the rental stock is 30 to 50 years old and becoming outdated. That creates a shortage of well-located, modern units for renters willing to pay more.​

Chicago, Cincinnati, Minneapolis, St. Louis and Milwaukee posted growth of roughly 2% to 4% in 2025, according to RealPage. Having missed out on the pre- and post-pandemic new apartment construction boom in the Sun Belt, new unit deliveries in 2025 fell below the Midwest’s 10-year average, according to industry reports.​

With fewer lease-ups competing for tenants, landlords have relied less on concessions. That has kept vacancy pressure milder and rent rolls firmer than in high-supply markets.​

Moving back home​

While some analysts point to little growth in the Midwest, Cleveland Fed economists described a different pattern. They found that roughly a quarter to a third of native out-migrants eventually return to their home regions. Many return to large Midwest metros, including Detroit, Cleveland, Cincinnati and Kansas City.​

These returnees make up a small share of the population at any given time. But they often arrive with stronger credit, in-demand skills and built-in social networks, the report said. That can reinforce rental demand in hometown neighborhoods, as many rent before deciding whether to buy.​

The economists said the same forces shape the region’s appeal. Lower cost of living and stable job bases can pull residents back from pricier coastal markets.​

Affordable housing is relative​

Apartments in Indianapolis, Columbus and Detroit rent for far less than comparable units on the coasts or in booming Southern metros. That gap has drawn renters fleeing expensive hubs. It has also attracted investors seeking a steady yield rather than rapid growth.​

Even with cheaper rents, affordability has become an issue for regional lawmakers. The glaring shortage in residential supply impacts the more affordable housing spectrum. Illinois Gov. J.B. Pritzker recently launched a legislative push to lower housing costs through zoning changes. Indiana is pursuing similar changes this year.​

Both efforts echo measures that have gained traction in Florida and Texas. Legislators in those states have tried to temper housing costs by lowering barriers to increased supply.​

Future for Midwest apartment demand

In many Midwest metros, diversified economies continue to support steady absorption, even as elevated mortgage rates sideline would-be homebuyers. That keeps renters in place longer and gives rental property owners more pricing power than in overbuilt markets.​

For now, the mix of stable employment, constrained construction and relative affordability positions the Midwest as a relative winner. As the national apartment market shifts into a slower, more uneven phase, these markets look built to hold their edge.