Buyers hoping to save money for a down payment paying high rents instead
For any would-be buyer who’s renting while saving enough money for a down payment on a home, time may not be on their side.
As the housing market slows down across the country, rents are going up, and landlords are cashing in.
Home-price appreciation continued to slow in April from a year earlier, driven in part by softening West Coast metros like San Jose and Seattle, according to data released Thursday by Zillow. The company also reported the first nationwide monthly price dip in more than seven years, although at just 0.1%, it’s far from drastic. Rent growth, on the other hand, actually accelerated, climbing 2.6% on an annual basis, after a lull in 2018.
Americans pulled back from home purchases last year after mortgage rates spiked, exposing the underlying affordability problem in the property market. Many people piled into rentals, where landlords were offering concessions after a period of overbuilding higher-end units. That increased demand helped drive up what people were willing to pay for an apartment.
Rents and home values tend to move together over the long-term, said Skylar Olsen, Zillow’s director of economic research. “But, in this case, what we’re seeing is a little different.”
A shortage of inventory usually dominates the conversation around current housing issues; for various reasons, the number of entry-level homes available just isn’t keeping up with the number of mortgage-ready would-be home buyers. This is keeping a lot of those people have to live somewhere, and many continue to rent, being forced to pay higher prices.
