Rents are climbing at the fastest pace since May 2016. That pace? 2.8% to $1,445/month in February 2018, according to Zillow’s latest data on rental costs.
Zillow says that this climb in rental costs is the result of the every-tightening housing market. Rising prices at all market tiers and lack of inventory are keeping potential buyers, now renters, from becoming homeowners.
Aaron Terraza, chief economist with Zillow, said, “For sale inventory is tight and with home prices continuing their rapid climb, it’s becoming more and more difficult for renters to become owners, forcing them to rent longer than they otherwise would have.”
Terraza continued. “Searching for the ‘right’ home is now a long, drawn out process and rising prices require more savings for a down payment. Were it not for strong new apartment construction over the past half decade, rental appreciation would be even strong than it is now.”
Tight rental markets in Atlanta and throughout Minnesota have jacked up rents +4.5%. In Sacramento, one of the hottest markets in the country due to San Francisco Bay Area residents moving out and selling their homes , rents have increased a whooping +8%.
Meanwhile, home values nationwide have increased +7.6% y/y in February 2018 with a median price of $210,200.
San Jose home values have escalated the fastest in the country. Currently, home values there have increased 26% with a median single-family home value of $1.25M. Las Vegas home values have increased the second fastest at +16% and Seattle comes in third fastest with home values rising +14%.