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Market Trends

The Rent Is Getting Too Damn High

By | January 25, 2018

Finding and buying a home is tough these days, but paying the rent isn’t much easier.

As part of our semi-regular look at rental prices across the U.S. housing market, we found that the median rent rose 3.1% last year. But in many markets, prices rose significantly – nearly three-times as much. In fact, in Tacoma, Wash., Sacramento, Calif., Milwaukee and Los Angeles rents rose 8% or more based on our estimates.

Rising rents may come as somewhat of a surprise. After all, the number or households renting has been declining while homeownership increased, and rent increases have slowed somewhat in the last year compared to the last five years.

Since the end of 2012, the year housing prices bottomed amid the crash, rents have increased 19.6% nationally. But again, if you’re unfortunate enough to live in a few hot housing markets, you’re feeling more pain. Places like Cape Coral-Fort Myers, Fla., and Oakland, Calif., have seen increases of more than 50% since the end of the Great Recession.

Our analysis of rents based on our estimates found:

  • Rent climbed 3.1% nationally in 2017 and has risen 19.6% since the end of 2012, the year housing prices bottomed. Rents nationally mostly have trailed housing price increases.
  • Markets in the West have lead the country in rent increases, with seven of the top 10 metros with the biggest rent increases were in the West. Three of these were in California.
  • California rents rose the most for five year gains: Oakland, San Jose, Calif., San Francisco and Sacramento, Calif., ranked in the top 10 for rent increases during this period.


Biggest Rent Increases in 2017 by Market[1]
Market 2016 Median Rent 2017 Median Rent One-Year Increase
Tacoma, WA $1,650 $1,795 8.8%
Sacramento, CA $1,750 $1,895 8.3%
Milwaukee, WI $1,250 $1,350 8.0%
Los Angeles, CA $2,500 $2,700 8.0%
Colorado Springs, CO $1,450 $1,550 6.9%
Deltona-Daytona Beach-Ormond Beach, FL $1,310 $1,400 6.9%
Salt Lake City, UT $1,499 $1,600 6.7%
Gary, IN $1,200 $1,275 6.3%
Fresno, CA $1,295 $1,375 6.2%
Las Vegas, NV $1,275 $1,350 5.9%

[1] Based on Trulia rental estimates. Updated Jan. 25 at 6 p.m. ET to correct an error with 2016 rent estimates.



Where Rents Are Rising It’s Still Better to Buy


Perhaps not surprisingly, rents rose the most in places where rents were already high. San Francisco leads the nation in estimated median rent at $4,000 monthly, it also has seen the seventh-biggest five-year increase (37.9%) among the nation’s 100 biggest housing markets. In San Jose, Calif., where rents rose 40% since 2012, the estimated median rent is now $3,500, second only to San Francisco. The exception: Cape Coral-Fort Myers where the $1,700 median rent ranks 31st among the top 100 U.S. housing markets.

That said, San Francisco and San Jose are standouts in the nation’s housing markets for consumers considering renting or buying. Our most recent analysis found those markets are close to toss-ups when it comes to buying or renting assuming a 30-year fixed mortgage and staying in a home at least seven years. Among the rest of the top 100 housing markets, it’s still significantly cheaper – 37.4% based on the median in those markets – to buy.



Some Markets Are Building to Relieve Price Pressure


There is some hope for relief. More supply could release pressure on prices for both buying and renting. Last year, building permits increased from 2016. And while multi-family construction has slowed somewhat recently in favor of single-family building, some markets have seen a big jump in new construction compared to their historical pace. Among them: Denver, San Francisco, San Jose. Homebuilding in those markets is much needed. Those markets reported some of the biggest estimated median rent increases in the last five years as well as Austin, Texas, Charleston, S.C., Nashville, Tenn., and Philadelphia. It may be too early to gauge the impact of new construction. But Denver, San Francisco and San Jose saw some of the highest 5-year rental increases, but ranked in the middle of the pack in 2017. The markets ranked 20th, 70th and 41st respectively.

One place where new construction may not relieve pressure on rents: Daytona Beach, Fla., where building has slowed compared to the historic average.



The Good and Bad News About Renting


Ultimately, the good news about renting is that when compared to home prices nationally, landlords aren’t raising rents at the rate housing prices are rising. The estimated U.S. median home price rose 6.2% in the twelve months ending in Dec. 31, compared to a 3.1% increase in estimated median rents for the top 100 markets for all of 2017. Housing prices nationally rose at an annual rate of 5.8% in the last five years but our estimated median rent rose only 3.6% annually during the same period. The bad news is that as price appreciation outpaces rents, the financial benefits of buying a house fall.



Biggest Rent Increases 2012-2017 by Market1
Market 2012 Median Rent 2017 Median Rent Five-Year Increase
Cape Coral-Fort Myers, FL $1,050 $1,700 61.9%
Oakland, CA $1,952 $2,950 51.1%
Denver, CO $1,495 $2,095 40.1%
Deltona-Daytona Beach-Ormond Beach, FL $1,000 $1,400 40.0%
San Jose, CA $2,500 $3,500 40.0%
Seattle, WA $1,645 $2,300 39.8%
San Francisco, CA $2,900 $4,000 37.9%
Long Island, NY $2,200 $3,000 36.4%
Sacramento, CA $1,395 $1,895 35.8%
Portland, OR $1,395 $1,895 35.8%



Source and Methodology


This report used proprietary Trulia data for median rental estimates in the 100 biggest U.S. metro areas. The data is from December 2012 to December 2017. Home value data is estimated median home value for the U.S. market from December 2012 to December 2017.