The median national rent rose toward the end of 2017, contrary to the predominant trend for the year, according to the November Zillow® Real Estate Market Report. The gain, 2.4 percent year-over-year to $1,435, is on par with income increases, which have ticked up 2.5 percent since November 2016.
“After about a two-year slowdown, rent growth is starting to pick back up across the nation,” says Aaron Terrazas, senior economist at Zillow. “The slowdown in rental appreciation, combined with consistent income growth, gave renters some reprieve from worsening rental affordability over the past few years.”
However, “As rental growth begins to catch up with income growth, affordability will deteriorate, placing a squeeze on budget-constrained renters,” Terrazas says.
An analysis conducted last year by Zillow found that the average renter would need more than $150 extra each month to accommodate rent raises. At the time, Zillow expected a 1 percent rise for the year.
The challenge is intensified in markets with rapid rent raises, according to the report: Sacramento, Calif., where the median has gone up 7.5 percent year-over-year ($1,829); and Riverside, Calif., where the median has gone up 6.2 percent ($1,847).
The cost could prod renters, says Terrazas.
“Looking into 2018, rent is expected to continue gaining steam in growing employment centers like Dallas and New York, as well as a few smaller markets like Cleveland,” Terrazas says. “More widespread rent growth could mean home-buying demands stay high, as renters who can afford it move away from the unpredictability of rising rents toward the relative stability of a monthly mortgage payment instead.”
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