Rising rents have been a fact of life in the Boston area for some time, but now the squeeze is on even in many struggling markets across the country, according to a new report from real estate portal Zillow.
U.S. rents were up 3.3 percent year-over-year in January, near historic norms. But rents are rising much more rapidly in some markets, such as Denver, Colo. (10.2 percent); Kansas City (8.5 percent); Portland, Ore. (7.2 percent) and Charlotte, N.C. (6.1 percent). In the Boston metro, rents were also rising higher than the national average, up 4.6 percent year-over-year, to $2,149.
The fastest-growing rent in the country was in San Francisco, where median rent was up 15 percent year-over-year for the fourth month in a row.
“Rental appreciation has been a freight train these past few years, chugging along without any appreciable slowdown. Since 2000, rents have grown roughly twice as fast as wages, and you don’t have to be an economist to understand why that is hugely problematic,” Stan Humphries, Zillow’s chief economist, said in a statement. “More than one-third of Americans are renters, and today’s renters are tomorrow’s buyers. For many current renters, buying a home could mean both a lower and more stable monthly payment, but rising and increasingly unaffordable rents make it difficult to save for a down payment on a home. The rental market used to be and should remain a stepping-stone to homeownership. But given how widespread rental affordability problems have become, the rental market could be acting more like a barrier to buying.”
While rents are rising swiftly, home values are slowing their gains. In January, national home values rose were up 5.4 percent year-over-year, the ninth straight month of slowing growth. The U.S. Zillow Home Value Index rose 0.2 percent from December to a median value of $178,500. Home values are up 3.2 percent year-over-year in the Boston area, to $365,400.
By the end of the year, Zillow expects growth in rents to outpace growth in home values, and the firm predicts U.S. home values will grow another 1.9 percent through January 2016, according to the Zillow Home Value Forecast.
