Rents Rise at Slowest Pace in Five Years

Rents across the country rose 0.7 percent from this time last year, the slowest pace since November 2012, according to Zillow's March Real Estate Market Reports

- Rents rose 0.7 percent over the past year to a Zillow Rent Index (ZRI) of $1,408 per month, the slowest rate of appreciation since November 2012 when rents were up 0.6 percent.

- U.S. home values rose 6.8 percent over the past year to a Zillow Home Value Index (ZHVI) of $196,500 in March.

- There are 5 percent fewer homes on the market this year than last, with Minneapolis, Columbus, Ohio and Seattle reporting the greatest drop in inventory.

- Mortgage rates on Zillow ended March at 3.94 percent, down from a high of 4.13 percent mid-month.

News provided by

Zillow

Apr 20, 2017, 08:00 ET

SEATTLE, April 20, 2017 /PRNewswire/ -- Rents across the country rose 0.7 percent from last March, the slowest rate of appreciation since November 2012, as new construction began to meet renter demand and soften the market. The median rent payment in the U.S. is now $1,408, according to the March Zillow® Real Estate Market Reports^ⁱ.

Rents in the Bay Area have slowed more than any other large metropolitan area over the past year. In San Francisco, rents are down 0.1 percent after appreciating almost 10 percent annually at this time last year. Rents in San Jose were rising at almost 9 percent annually a year ago, but fell 1.1 percent over the past year to a median rent payment of $3,451.

Even in hot West Coast markets, where rental growth is notoriously strong, rent appreciation is starting to slow. In Seattle, rents are up 6.7 percent, but their pace of appreciation has been slowing since August 2016. Rents in Sacramento are up 4.7 percent, but were rising at almost 7 percent annually toward the end of last year.

Affordability is a significant issue for renters across the country, who have experienced rising rents for years. In many major metros, the share of income needed to pay rent well surpasses the general rule of not spending more than 30 percent of income on housing. In Los Angeles, the median rent payment takes up almost half of the median income, which forces renters to shack up with roommates in order to make housing more affordable.

"The slowdown in rental appreciating is mainly due to new construction finally meeting demand, and even outpacing demand in some areas," said Zillow's Chief Economist Dr. Svenja Gudell. "But, rents are the highest they've ever been, weighing heavily on renters' budgets and making it extremely difficult for those renters hoping to become homeowners to save enough money for a down payment. In most markets, a monthly mortgage payment is more affordable than a monthly rent payment, but the most difficult aspect of home buying for many aspiring home owners is coming up with enough money for the down payment."

The median home value across the country is $196,500, up 6.8 percent since this time last year. Seattle, Tampa, Fla. and Dallas reported the highest year-over-year home value appreciation among the 35 largest U.S. metros. In Seattle, home values rose almost 12 percent to a median value of $426,300. Home values in Tampa and Dallas are up about 11 percent since this time last year.

Low inventory continues to be a problem for home shoppers across the country -- there are 5 percent fewer homes to choose from than a year ago, paving the way for an extremely competitive home shopping season.

Minneapolis, Columbus, Ohio and Seattle reported the greatest drop in inventory among the 35 largest U.S. metros. In Minneapolis, there are 24 percent fewer homes to choose from than a year ago, and 19.5 percent fewer to choose from in Columbus. In Seattle, where home values are growing the fastest, buyers will have 17 percent fewer homes to choose from than a year ago.

Mortgage rates are down from their December highs, but still well above where they were before the election. In March, mortgage rates^ⁱⁱ on Zillow ended at 3.94 percent, down from a high of 4.13 percentⁱⁱⁱ. The month low was 3.93 percent^{^iv}. 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.

Metropolitan Area	Zillow Home Value Index[v] (ZHVI)	Year- over-Year ZHVI Change	Zillow Rent Index[vi] (ZRI)	Year- over- Year ZRI Change	Year-over-Year ZRI Change at This Time Last Year	Year-over- Year Inventory Change
United States	$ 196,500	6.8%	$ 1,408	0.7%	3.3%	-5.3%
New York/ Northern New Jersey	$ 411,300	7.6%	$ 2,386	-1.3%	4.3%	-10.6%
Los Angeles-Long Beach-Anaheim, CA	$ 601,900	6.1%	$ 2,648	4.4%	4.1%	-7.2%
Chicago, IL	$ 208,400	6.4%	$ 1,618	-1.9%	1.6%	-8.7%
Dallas-Fort Worth, TX	$ 205,300	11.0%	$ 1,569	3.2%	4.6%	5.3%
Philadelphia, PA	$ 216,000	4.4%	$ 1,565	0.0%	2.4%	-9.9%
Houston, TX	$ 174,500	3.2%	$ 1,544	-2.5%	4.0%	2.7%
Washington, DC	$ 382,900	3.8%	$ 2,115	-0.3%	1.4%	-12.2%
Miami-Fort Lauderdale, FL	$ 249,700	8.7%	$ 1,849	-0.6%	5.0%	8.7%
Atlanta, GA	$ 175,800	7.1%	$ 1,337	3.2%	4.4%	1.2%
Boston, MA	$ 419,900	7.0%	$ 2,351	4.0%	5.4%	-14.0%
San Francisco, CA	$ 843,200	4.4%	$ 3,352	-0.1%	9.9%	-1.1%
Detroit, MI	$ 138,700	10.1%	$ 1,175	1.2%	3.1%	-14.9%
Riverside, CA	$ 322,700	6.7%	$ 1,759	2.7%	3.8%	-13.7%
Phoenix, AZ	$ 232,700	6.4%	$ 1,310	2.5%	4.6%	5.0%
Seattle, WA	$ 426,300	11.6%	$ 2,106	6.7%	8.0%	-17.2%
Minneapolis-St Paul, MN	$ 241,900	7.7%	$ 1,570	3.4%	2.8%	-24.0%
San Diego, CA	$ 532,000	5.2%	$ 2,453	3.4%	4.2%	-10.8%
St. Louis, MO	$ 149,300	6.2%	$ 1,137	0.3%	1.9%	-7.5%
Tampa, FL	$ 183,300	11.4%	$ 1,351	2.7%	4.5%	-8.9%
Baltimore, MD	$ 259,200	4.0%	$ 1,717	-0.8%	1.5%	-15.4%
Denver, CO	$ 362,800	9.5%	$ 1,997	0.7%	7.8%	4.5%
Pittsburgh, PA	$ 135,700	4.8%	$ 1,067	-4.6%	5.0%	-5.8%
Portland, OR	$ 359,800	7.2%	$ 1,805	4.6%	9.4%	6.7%
Charlotte, NC	$ 170,600	7.2%	$ 1,250	1.1%	3.1%	-11.4%
Sacramento, CA	$ 361,000	8.2%	$ 1,717	4.7%	5.5%	-12.7%
San Antonio, TX	$ 158,500	5.6%	$ 1,325	1.4%	2.5%	13.4%
Orlando, FL	$ 202,900	10.0%	$ 1,400	3.2%	4.4%	-11.0%
Cincinnati, OH	$ 151,300	6.7%	$ 1,254	1.9%	2.2%	-15.6%
Cleveland, OH	$ 132,400	4.7%	$ 1,144	1.2%	0.1%	2.2%
Kansas City, MO	$ 155,600	5.9%	$ 1,254	1.5%	5.2%	-10.5%
Las Vegas, NV	$ 219,200	9.9%	$ 1,247	1.3%	3.2%	22.8%
Columbus, OH	$ 161,700	4.8%	$ 1,296	1.2%	3.3%	-19.5%
Indianapolis, IN	$ 137,300	5.5%	$ 1,186	-0.3%	0.8%	-12.8%
San Jose, CA	$ 986,000	3.4%	$ 3,451	-1.1%	8.6%	-8.0%
Austin, TX	$ 267,500	7.3%	$ 1,691	-0.6%	3.2%	23.5%

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. Launched in 2006, Zillow is owned and operated by Zillow Group (NASDAQ:Z and ZG), and headquartered in Seattle.

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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 Rates for a 30-year fixed mortgage.
iii Month high occurred on Tuesday, March 14^th.
iv Month low occurred on Wednesday, March 22^nd.
v 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.
vi 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.