Rents Gallop Past Home Values in April

In April, rents grew at four percent year-over-year, overtaking home values, which appreciated at an annual rate of three percent

- U.S. rents grew at their fastest pace in two years in April, surpassing home values.

- Rents grew faster than home values in 20 of the 35 largest U.S. housing markets.

- Home value growth is expected to slow further in the second half of the year as the for-sale housing market stabilizes.

News provided by

Zillow

May 21, 2015, 08:00 ET

SEATTLE, May 21, 2015 /PRNewswire/ -- Soaring rents outpaced home values in April for the first time in years, further deepening a "rental crisis" and signaling that home values are growing at a more normal pace, according to April Zillow® Real Estate Market Reports[i].

Home values in April ticked slightly upward from March, to a national Zillow Home Value Index[ii] of $178,400 – a three percent increase over last April. The Zillow Rent Index (ZRI) [iii] rose four percent year-over-year, to $1,364.

The switch comes after years of rapid home-value increases sped along by the improving economy. U.S. home values peaked in 2007, and then crashed during the Great Recession between 2008 and 2010. Since then, they have risen rapidly, returning to their peak levels in many markets.

Home values have both risen and fallen over the past decade, but rents have been steadily rising. They are now higher than ever before[iv].

Rental growth has been outpacing home value growth for several months in some of the nation's hottest markets. In San Francisco, rents started rising faster than home values in July 2014, and have been growing faster ever since on an annual basis. In Boston, annual rental growth has outpaced home value appreciation since August 2014.

Low mortgage rates have helped make buying a home much more affordable than renting. On average, U.S. homebuyers can expect to spend about 15.3 percent of their income each month on a typical house payment. Renters can expect to spend about 30 percent on a monthly rent payment.

"There are tremendous incentives to get into homeownership these days: mortgage access is improving, interest rates are low, and home values remain below prior peaks," said Zillow Chief Economist Dr. Stan Humphries. "But it will be increasingly difficult for many renters to realize these benefits as this country's growing rental affordability crisis continues to worsen. More income going to rent means less going to savings for a down payment and other costs, keeping renters renting longer and feeding into the high demand that is contributing to rising rents in the first place. This cycle will be difficult to break, and is a symptom of the imbalances that still exist in the housing market as we struggle to get back to normal. New construction and rising wages will help, but neither is coming very quickly."

Over the next year, home value growth is expected to slow even further, to 2 percent annually, according to the Zillow Home Value Forecast.[v] In 2014, home values rose 4.9 percent.

	Zillow Home Value Index (ZHVI)		Zillow Rent Index (ZRI)		Zillow Home Value Forecast (ZHVF)
Metro	April 2015 ZHVI	Year-over-Year % Change in ZHVI	April 2015 ZRI	Year-over-Year % Change in ZRI	Expected Year-over-year % ZHVI change for April 2016
United States	$178,400	3.0%	$1,364	4.0%	2.0%
New York, NY	$379,400	0.8%	$2,372	3.4%	-0.5%
Los Angeles, CA	$534,300	3.1%	$2,498	5.6%	1.1%
Chicago, IL	$186,800	1.1%	$1,610	-1.0%	1.2%
Dallas-Fort Worth, TX	$159,700	11.0%	$1,465	5.5%	5.7%
Philadelphia, PA	$200,500	0.8%	$1,567	2.8%	0.3%
Houston, TX	$158,300	9.9%	$1,513	6.1%	3.0%
Washington, DC	$360,700	1.2%	$2,107	2.1%	0.3%
Miami-Fort Lauderdale, FL	$214,400	9.9%	$1,796	3.2%	0.7%
Atlanta, GA	$155,700	7.8%	$1,247	4.9%	3.9%
Boston, MA	$364,900	1.7%	$2,184	5.2%	0.7%
San Francisco, CA	$738,200	10.3%	$3,162	14.9%	5.0%
Detroit, MI	$114,300	5.1%	$1,121	6.0%	2.8%
Riverside, CA	$285,100	5.9%	$1,674	4.2%	4.7%
Phoenix, AZ	$201,800	4.5%	$1,247	5.4%	2.1%
Seattle, WA	$348,700	6.9%	$1,858	6.2%	6.8%
Minneapolis-St Paul, MN	$210,300	2.7%	$1,513	-0.3%	2.2%
San Diego, CA	$475,600	4.1%	$2,330	5.1%	1.2%
St. Louis, MO	$133,700	3.3%	$1,137	4.5%	2.9%
Tampa, FL	$149,800	7.2%	$1,281	4.1%	2.4%
Baltimore, MD	$241,500	0.2%	$1,734	2.7%	0.6%
Denver, CO	$294,100	14.2%	$1,868	11.6%	5.7%
Pittsburgh, PA	$124,200	2.0%	$1,124	4.4%	1.8%
Portland, OR	$282,900	4.7%	$1,614	8.6%	4.2%
Sacramento, CA	$338,200	6.7%	$1,660	5.9%	5.6%
San Antonio, TX	$147,600	3.2%	$1,316	4.6%	3.4%
Orlando, FL	$170,500	6.0%	$1,319	2.0%	2.8%
Cincinnati, OH	$137,000	2.5%	$1,244	6.2%	2.5%
Cleveland, OH	$120,300	0.7%	$1,161	2.4%	2.4%
Kansas City, MO	$138,900	0.3%	$1,240	9.5%	3.2%
Las Vegas, NV	$186,700	7.1%	$1,200	2.1%	4.1%
San Jose, CA	$873,600	11.9%	$3,287	12.9%	4.9%
Columbus, OH	$146,900	3.5%	$1,262	2.6%	3.1%
Charlotte, NC	$159,200	4.5%	$1,253	6.6%	2.5%
Indianapolis, IN	$130,400	-0.3%	$1,199	1.5%	3.8%

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. Stan Humphries. In 2015, Dr. Humphries co-wrote and published the New York Times' bestselling "Zillow Talk: The New Rules of Real Estate." Dr. Humphries and his 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, Inc. (NASDAQ: Z), and headquartered in Seattle.

Zillow and Zestimate are registered trademarks 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 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 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
[iv] Rents are higher nationally than any time since the Zillow Rent Index began tracking rental values in 2010
[v] This expectation is based on the Zillow Home Value Forecast, which uses data from past home value trends and current market conditions, including leading indicators like home sales, months of housing inventory supply and unemployment, to predict home values over the next 12 months for the nation and for more than 250 markets across the country.

SOURCE Zillow