According to the May 2018 Zillow Real Estate Market Report, median rent is appreciating more quickly this spring than last in 27 of the 35 largest U.S markets.
Pittsburgh, Detroit and Houston reported the greatest jumps in annual rent growth this spring compared to last. Median rent in all three of these metros was falling at this time last year, but is now appreciating over 1 percent annually.
In some of the nation’s most expensive rental markets, median rent is appreciating more slowly now than last spring. In Seattle, for example, where annual rent growth has been among the highest in the country, rent appreciation has slowed from a 5.8 percent annual growth rate last spring, to a 3.3 percent annual growth rate now. A similar trend holds true in Los Angeles, Portland and Boston.
Across the U.S., rent growth has been holding steady at about a 2-3 percent annual appreciation rate for the past 11 months. Median rent rose 2.1 percent over the past year to $1,440 per month.
Saving enough money for a down payment is one of the greatest hurdles to homeownership, and rising rents is one of the main reasons why saving is so difficult. Even in markets where rent growth is slowing, high prices have already been established. With mortgage rates rising and mortgage affordability deteriorating, owning a home may start to feel out of reach for many Americans.
“Over the past two years, rent growth slowed across the country as new apartments hit the market and renters with the financial means to do so increasingly became homeowners,” said Zillow Senior Economist Aaron Terrazas.
“The slowdown in rent growth was most prominent in the markets that moved most quickly to add units – either because it was easy to build or because of local demands. But the ever-swinging pendulum is again on the move. This spring rent appreciation has perked back up nationwide, though it remains well within a long-term sustainable range. The ebb-and-flow of supply and demand is following slightly different timeliness in different markets, but over the past two years, we have seen similar trends in markets from the Southeast to the Northwest.”
Home values continue to appreciate across the country. The median U.S. home value rose just over 8 percent over the past year to $216,000. San Jose, Calif., Las Vegas and Seattle reported the greatest annual home value appreciation among the 35 largest U.S. metros.