Rent For Houses Is Rising Faster Than Apartment Rent

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The Editors's picture
House rent rising faster than apartment rent

Monthly rent for houses is rising  faster than apartment rent due to the short supply of rental homes and Portland home rental rates lead U.S. metros areas, according to a new study.

Rental houses have been in high demand since the housing market crashed, but a lack of supply has made renting those homes more expensive, according to a new Zillow analysis, as the median monthly rent for single-family homes is rising faster than the median monthly rent for apartments.

While rents for both houses and apartments have slowed significantly over the past year, median rent for houses rose 1.3 percent annually to a monthly rent payment of $1,404, but median rent for apartments rose 0.5 percent, to a monthly rent payment of $1,551.

Portland house rent rising faster than apartment rent

In half of the 50 largest U.S. metros, median rent for houses is rising faster than median rent for apartments, and Portland leads the pack, according to Zillow.

In Portland, monthly rent for houses is rising at almost 4.5 percent annually, but monthly rent for apartments is falling.

 Over the past year, median apartment rent for Portland  fell just over 1 percent, to a monthly payment of $1,536.

Median apartment rent in Chicago is also falling, while rent for houses is rising just over 1 percent annually.

"When the market crashed, many families lost homes they owned during the foreclosure crisis, and now may not be able to afford to buy another as home prices rise,"  Zillow Chief Economist Dr. Svenja Gudell, said in the release.

"Those who want to buy are finding it difficult to find the right one, or may need a bit more time to come up with a down payment, but still want the advantage of space that single-family residences often provide.

“This, coupled with the foreclosure crisis turning millions of homeowners into renters, is a big reason why demand for single-family rental homes has risen over the last few years. Even though rental homes are in high demand, apartment living remains an attractive option for many young renters who want to be close to work and amenities, like restaurants and grocery stores,” Gudell said.

45 percent of renters consider a single-family home

There are fewer single-family homes to rent than a decade ago. When the housing market crashed, investors scooped up many single-family homes lost to foreclosure and turned them into rentals. Almost 20 percent of all single-family homes across the U.S. were rented in 2016, up from 13.5 percent 10 years prior.

Meanwhile, rentals are in increasingly high demand because many aspiring homeowners don't have enough money to buy a home. A 20 percent down payment on a typical U.S. home costs more than two-thirds of the median household income, but can cost up to 180 percent of the median household income in pricier housing markets like San Jose and Los Angeles.

According to the 2017 Zillow Group Consumer Housing Trends Reporti (ZGR) coming out this fall, 45 percent of all recent renters consider renting a single-family home, but just 28 percent actually ended up renting one. The report also found that half of all buyers with children at home consider renting instead of buying during their home search, and according to the Census Bureau, 40 percent of families with children still living at home are renters.

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