Skyrocketing rents may make homeownership more attractive – but the rising challenges of ownership may be key drivers of the increased popularity of renting
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If renters in your area are on the fence about whether to buy, now might be a good time. Rent hit an all-time high last month, hitting a national average of $1,408, according to new data, which might make homeownership more attractive – but it may be the growing challenges of homeownership that are driving the increased popularity of renting.
According to a study from RentCafé and Yardi Matrix, rent rose nationally by 2.9% year over year and 0.9% month over month. Rent increased in 88% of the country’s 250 largest cities, stayed static in 10%, and decreased in only 2%.
Renting is gaining popularity among families, according to RentCafé, and two- and three-bedroom units have been the main drivers of rent growth so far this year. However, June’s increases were almost perfectly balanced among unit types, as demand for one-bedroom and studio apartments caught up to demand for larger units.
“None of the rental mega-markets of the country escaped steep rent increases this month,” RentCafé said.
Orlando saw the largest proportional increase, with renters paying an average of 8.4%, or $104, more per month than they did in June of 2017. Apartments in Tampa, Phoenix and Las Vegas cost between 6% and 7% more than they did last year.
Small cities, however, continue to dominate the national market when it comes to rent growth. The oil industry hubs of Midland and Odessa, Texas, both saw rents skyrocket over the last year. Midland saw an average rent increase of 38.8% compared to June of 2017, while Odessa saw an average 36.6% year-over-year increase, according to RentCafé. Lancaster, Calif., saw an average 10.2% increase, and Reno, Nev., saw rents increase by an average of 9.9%.
Doug Ressler, director of business intelligence at Yardi Matrix, said that a significant part of rising rent prices is being driven by a growing trend of homeowners getting rid of their houses in favor of apartments.
“Generational and demographic changes, shifting employment opportunities, police and economic influences are impacting the housing market and turning buyers into renters nationally,” Ressler said. “Student loan debt, smaller household sizes, larger down payment requirements (and) rising interest rates are also contributing to this change.”
