Rent Growth Accelerating at Fastest Pace in 21 Months

SEATTLE, March 22, 2018 /PRNewswire/ -- Median rent across the nation is accelerating at its fastest pace in 21 months, according to the February Zillow® Real Estate Market Reportⁱ. Over the past year, the median rent in the U.S. rose 2.8 percent to a Zillow Rent Indexⁱⁱ (ZRI) of $1,445.

The fastest appreciating rental markets are along the West Coast in Sacramento, Calif., Riverside, Calif., and Seattle. This is the seventh month in a row that Sacramento has topped the list of markets with the fastest rental growth. Median rent in Sacramento rose more than 8 percent since last February to a ZRI of $1,849.

Minneapolis and Atlanta also are among the fastest-appreciating rental markets, both reporting about a 4.5 appreciation rate over the past year.

As for-sale inventory remains tight, home prices rise and higher mortgage rates erode affordability, more households may opt to rent rather than buy -- either by necessity or by choice -- driving up demand for rental homes.

"Rental appreciation slowed between 2015 and mid-2017, but is once again picking up steam, reaccelerating over the past nine months," said Zillow senior economist Aaron Terrazas. "For-sale inventory is tight, and with home prices continuing their rapid climb, it's becoming more and more difficult for renters to become owners, forcing them to rent longer than they otherwise would have. Searching for the 'right' home has become a drawn out affair and rising prices require more savings for a down payment. Were it not for strong new apartment construction over the past half-decade, rental appreciation would be even stronger than it is now."

Over the past nine months, national home value growth has fluctuated in the range of 7.2 percent to 7.6 percent annually. For the year ending in February 2018, home values rose 7.6 percent to a median of $210,200.

San Jose, Calif., Las Vegas and Seattle reported the greatest home value growth over the past year. In San Jose, home values rose more than 26 percent since last February to a median of $1,252,400. In Las Vegas, the median home value rose almost 16 percent; in Seattle, the median home value rose 14 percent.

Going into home shopping season, buyers will have 10 percent fewer homes to choose from than a year ago, with San Jose, Columbus, Ohio and Las Vegas reporting the greatest drop in inventory. In San Jose, there are almost 27 percent fewer homes on the market than last year, and 24 percent fewer in Columbus and Las Vegas.

The end of February saw mortgage rates at their highest since April 3, 2014. Mortgage ratesⁱⁱⁱ on Zillow increased throughout February, starting at 4.06 percent, the lowest rate of the month, and ending at 4.26 percent. The high was hit mid-month^iv, at 4.28 percent. Zillow's real-time mortgage rates are based on thousands of custom mortgage quotes submitted daily to anonymous borrowers on the Zillow Mortgages site and reflect the most recent changes in the market.

Zillow

Zillow is the leading real estate and rental marketplace dedicated to empowering consumers with data, inspiration and knowledge around the place they call home, and connecting them with the best local professionals who can help. In addition, Zillow operates an industry-leading economics and analytics bureau led by Zillow's Chief Economist Dr. Svenja Gudell. Dr. Gudell and her team of economists and data analysts produce extensive housing data and research covering more than 450 markets at Zillow Real Estate Research. Zillow also sponsors the quarterly Zillow Home Price Expectations Survey, which asks more than 100 leading economists, real estate experts and investment and market strategists to predict the path of the Zillow Home Value Index over the next five years. Launched in 2006, Zillow is owned and operated by Zillow Group, Inc. (NASDAQ:Z and ZG), and headquartered in Seattle.

Zillow is a registered trademark of Zillow, Inc.

ⁱ The Zillow Real Estate Market Reports are a monthly overview of the national and local real estate markets. The reports are compiled by Zillow Real Estate Research. For more information, visit www.zillow.com/research/. The data in Zillow's Real Estate Market Reports are aggregated from public sources by a number of data providers for 928 metropolitan and micropolitan areas dating back to 1996. Mortgage and home loan data are typically recorded in each county and publicly available through a county recorder's office. All current monthly data at the national, state, metro, city, ZIP code and neighborhood level can be accessed at www.zillow.com/local-info/ and www.zillow.com/research/data. 
ⁱⁱ The Zillow Rent Index (ZRI) is the median Rent Zestimate® (estimated monthly rental price) for a given geographic area on a given day, and includes the value of all single-family residences, condominiums, cooperatives and apartments in Zillow's database, regardless of whether they are currently listed for rent. It is expressed in dollars. 
ⁱⁱⁱ Mortgage rates for a 30-year fixed mortgage.
^iv Month high hit on February 15^th.

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SOURCE Zillow