More Rental Supply Helps Ease Rents

Annual rent appreciation slows for third consecutive month as more apartments become available

- Rents appreciated 4.5 percent year-over-year, down from 5.3 percent in September.

- Rents in large multifamily buildings rose 3.9 percent annually, while single-family residence rents grew 4.5 percent.

- Home values grew 4.3 percent year over year to a Zillow Home Value Index of $182,800.

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Nov 20, 2015, 08:00 ET

SEATTLE, Nov. 20, 2015 /PRNewswire/ -- Newly built apartment buildings are finally opening for new residents and slowing the rate of rental appreciation across the country, but rents are still rising much faster than the historical norm and continue to rise faster than incomes, according to the Zillow® October Real Estate Market Reportsⁱ.

Nationally, rents grew at 4.5 percent annually in October, down from 5.3 percent in September and down from a high of 6.6 percent in July. Single-family rents are rising faster than multifamily rents, at 4.5 compared to 3.9 percent.

Multifamily housing starts have been increasing since late 2009, and as units become available, the pace of rental appreciation is slowing. Lack of inventory has been a leading cause of the ongoing rental affordability crisis, especially in fast-growing markets.

Even the hottest rental markets, which have seen double-digit rent appreciation for the past five months, are growing at a slower pace although rents are still rising there more than twice as fast as the national average. The San Francisco metro has the fastest rental appreciation among the nation's 35 largest markets. Rents there are up 15.2 percent from last year, but they were growing as fast as 19 percent annually in June and July.

"Rental appreciation has started to slow down in part due to more rental supply. Many of the bigger multifamily rental projects that were begun a couple years ago in cities nationwide are finally starting to open for occupancy, easing pressure on rents somewhat," said Zillow Chief Economist Dr. Svenja Gudell. "But make no mistake: Despite this recent slowdown in rental appreciation, the rental affordability crisis we've been enduring for the past few years shows no signs of easing, especially as income growth remains weak. It will take a lot more supply, and a lot more renters-turned-homeowners, to fully reverse this trend."

As rents have grown and rental affordability continues to suffer, the stability and relative affordability of homeownership may be pushing some qualified renters to make the jump to homeownership. A widely expected December rate hike from the Federal Reserve could be an additional incentive for buyers to enter the market while rates remain low. Reflecting this, home values are growing at their fastest pace since November 2014, up 4.3 percent to a Zillow Home Value Indexⁱⁱ of $182,800.

Metro Name	October 2015 Zillow Home Value Index (ZHVI)	Year-over-Year Percent Change in ZHVI	October 2015 Zillow Rent Indexⁱⁱⁱ (ZRI)	Year-over-Year Percent Change in ZRI
United States	$182,800	4.3%	$1,382	4.5%
New York-Northern New Jersey	$380,400	1.8%	$2,355	5.3%
Los Angeles-Long Beach-Anaheim, CA	$551,300	6.2%	$2,485	5.8%
Chicago, IL	$192,000	2.1%	$1,642	1.4%
Dallas-Fort Worth, TX	$174,400	15.2%	$1,493	5.3%
Philadelphia, PA	$202,800	0.7%	$1,559	2.1%
Houston, TX	$168,500	8.6%	$1,574	6.4%
Washington, DC	$356,000	-0.4%	$2,112	1.7%
Miami-Fort Lauderdale, FL	$222,200	10.3%	$1,812	4.1%
Atlanta, GA	$158,500	5.5%	$1,275	5.0%
Boston, MA	$379,900	5.1%	$2,239	7.4%
San Francisco, CA	$773,400	12.2%	$3,303	15.2%
Detroit, MI	$120,200	6.5%	$1,131	2.3%
Riverside, CA	$294,800	5.9%	$1,686	4.1%
Phoenix, AZ	$213,000	8.0%	$1,250	4.5%
Seattle, WA	$363,200	8.7%	$1,912	7.4%
Minneapolis-St Paul, MN	$214,100	3.4%	$1,504	2.2%
San Diego, CA	$491,700	6.4%	$2,316	5.4%
St. Louis, MO	$139,800	7.1%	$1,122	2.7%
Tampa, FL	$157,800	8.2%	$1,293	5.1%
Baltimore, MD	$239,400	-1.2%	$1,718	2.1%
Denver, CO	$316,200	16.2%	$1,946	11.1%
Pittsburgh, PA	$126,800	2.4%	$1,097	2.4%
Portland, OR	$304,700	11.4%	$1,674	11.2%
Charlotte, NC	$155,600	3.7%	$1,220	5.2%
Sacramento, CA	$326,700	7.1%	$1,601	6.2%
San Antonio, TX	$147,300	6.9%	$1,309	5.4%
Orlando, FL	$178,100	6.6%	$1,339	4.9%
Cincinnati, OH	$140,500	3.3%	$1,228	4.8%
Cleveland, OH	$125,800	3.8%	$ 1,130	0.3%
Kansas City, MO	$145,900	5.4%	$1,196	4.8%
Las Vegas, NV	$196,600	8.5%	$1,214	2.6%
Columbus, OH	$151,000	5.9%	$1,273	4.6%
Indianapolis, IN	$129,200	3.9%	$1,189	2.1%
San Jose, CA	$922,100	13.3%	$3,398	11.0%
Austin, TX	$240,000	9.6%	$1,682	5.2%

About 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. Zillow also sponsors the bi-annual Zillow Housing Confidence Index (ZHCI) which measures consumer confidence in local housing markets, both currently and over time. Launched in 2006, Zillow is owned and operated by Zillow Group (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 Home Value Index (ZHVI) is the median estimated home value for a given geographic area on a given day and includes the value of all single-family residences, condominiums and cooperatives, regardless of whether they sold within a given period. It is expressed in dollars, and seasonally adjusted.
ⁱⁱⁱ 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.

SOURCE Zillow