Top 10 Out-of-Control Rental Markets Rents on the rise in some surprising cities By Diane Benson Harrington If you're in the market for a two-bedroom apartment, now's the time to plunk down first, last and security. Given the nation's increased house prices -- as much as 25 percent in some areas -- rents are actually fairly reasonable right now, says Bert Sperling of BestPlaces.net and coauthor of the new Cities Ranked and Rated, which reviewed all of the United States' 331 metro areas, plus 45 emerging metro areas as well as parts of Canada.

"People are getting a great deal for their money, especially in those areas where housing prices are out of control. That's where rents are actually being subsidized by the property owner," he notes. "What the property owner is hoping is that housing prices are going to continue to go up, and they'll make money in the future when they resell the property."

So if you don't have down payment money in your pocket, don't fret just yet. "Until home prices moderate, it makes much more sense -- instead of going severely into debt -- for people who are young and starting out to ride out this wave and rent," Sperling says.

One of the more intriguing ways to look at which markets are out of control is to look at those that have seen the highest percentage increase in rents in the past year. Those numbers are nothing compared to housing price increases, which have been as much as 25 percent a year. But they're a good indicator of areas that have strong growth expected for the long-term. Focusing on two-bedroom apartments, the metro areas that have seen 3 to 5 percent increases in rents are:

1. Albuquerque, NM, $720.00 -- a sort of challenging place. Has a tough time, but people are finding it's pretty appealing, so it's getting some good growth…
2. Norfolk/Virginia Beach, VA, $810
3. Riverside/Orange County, CA, $1095
4. Newark, NJ, $1070
5. Las Vegas-Clark County, NV, $860
6. Miami -Ft. Lauderdale, FL, $970
7. Washington, DC, $1220
8. Memphis, TN, $640
9. Cleveland, OH, $600
10. Baltimore, MD, $880

Amazed the Boston area isn't on this list? "Boston is one of the few places where prices have gone down a lot -- like 12 percent during 2003-2004. It's a good example of the high cost of housing keeping rents down," Sperling notes. Prices are slowly starting to increase again, but he says they're not nearly as out of control as they were before 2003.

The more typical way to scout out expensive rental markets is to look at those parts of the country with the highest average prices for a two-bedroom apartment, according to Sperling. Those markets are:

1. San Francisco, CA $1540
2. Stamford-Norwalk CT, $1500
3. Oxnard-Thousand Oaks-Ventura CA, $1460
4. Orange County, CA, $1390
5. Oakland-Fremont, CA, $1340
6. Santa Cruz-Watsonville, CA, $1340
7. Boston-Camidge-Quincy, MA $1320
8. San Jose-Sunnyvale-Santa Clara, CA, $1300
9. Nassau-Suffolk, NY, $1280
10. Washington-Arlington-Alexandria, DC-VA-MD, $1220

The rest of the Top 25 most expensive are filled out by some metro areas in California, Connecticut, Hawaii, Massachusetts, New Hampshire, New Jersey and New York.

So rent now, but do keep an eye on housing prices. Due to the way the economic world goes 'round (supply and demand), housing prices are going to go down again at some point -- and that's when rental rates will shoot up again, he says. One rule of thumb: When housing prices are low, more people invest in rental property, which increases the supply of rentals available. With more apartments available in any given area, prices tend to be lower.

Copyright Homestore Inc.