Slideshow 8 signs renters might start buying more homes

Published
  • January 18 2018, 4:03pm EST
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The homeownership rate has recovered somewhat from the post-crisis low of 62.9%, but still remains well below the peak of 69.1%. And as consumers are challenged by rising home prices and low inventory, some would-be buyers are continuing to rent longer than anticipated due to issues of affordability and demand.

While staying put in a rental unit may be a momentary fix, renters are still plagued by unique challenges. The rental market changed in many ways last year, signifying that renting isn't as appealing as it once was. The average renter paid $400 more over the course of 2017, or about $33 per month, according to a RentCafe report. That's an increase of 2.5% from 2016.

Prices for apartment types varied, with the cost to rent for one-bedroom units growing the most, and the average monthly price for studios rising the least.

The nation's hottest markets faced a slowdown in annual rental price appreciation, with rent in small cities soaring in 2017. Rent in Manhattan and Brooklyn declined by 1.7%, while the cost to rent in Odessa and Midland, Texas, leaped 33.6% and 28.2%, respectively. This means renters in these small cities paid over $3,400 extra in rent in 2017.

Of all large cities, Las Vegas posted the most accelerated annual growth in rent for 2017, where prices rose 6.3% to an average cost of $934 per month.

With the cost to rent growing nationwide in 2017 and even soaring in the smallest of cities, here's a look at eight signs renting just isn't appealing anymore.

RentCafe reports are based on data from Yardi Matrix, an apartment information service and sister division of RentCafe.

Rising rent

The national average rent grew by 2.5% year-over-over from 2016, with renters paying $1,359 per month by the end of 2017, according to Yardi Matrix. This means rent is roughly 24% higher than it was 10 years before when the national average monthly payment was $1,093.

The cost to rent an apartment has been growing steadily over the past 10 years, with its highest point reaching $1,363 this past August and September, and its lowest monthly price hitting $1,052 in May through July of 2010.

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Bigger burden

Since the cost for rent continued to grow last year, the average American renter paid about $400 in additional rent over the course of 2017 when compared to the previous year. That's about $33 more per month.

Size matters

The biggest price jump in rent was for one-bedroom units, with the average cost increasing 3.1% to $1,223 year-over-year in 2017. The average price for two-bedroom units grew 3% to $1,405 per month.

Rental prices for three-bedroom units bumped up to $1,640, an increase of 2.9%. Studio rentals had the lowest annual price appreciation, but still grew an average 2.2%, to $1,256.

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(Not so) hot markets

Rent growth eased in the nation's hottest markets, with the largest and most expensive metro areas in the country experiencing a much-anticipated slowdown. Many large cities saw rates decline, stagnate or appreciate slower than the 2017 national average, including in places like Austin, Texas, San Francisco and Washington, D.C.

Big Apple, little growth

With a 1.7% drop in rent, Manhattan and Brooklyn were among the cities with the lowest annual price appreciation. These New York City boroughs were followed by Portland, Ore., where rental costs fell 1.2%.

Tenants in New York City have benefited from a two-year-long freeze on rent stabilized units, which account for about a million apartments in the city. But a board vote last year allowed increases of 1% to 3% effective on leases from October 2017 through September 2018.

Oklahoma City and Austin, Texas, rounded off the top five large cities with the lowest price appreciation, with rents changing -0.1% and 0.9%, respectively.

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Viva Las Vegas

Of all large cities, Las Vegas posted the biggest growth rate from 2016 to 2017, with the cost to rent increasing 6.3%. Detroit, San Diego, Fort Worth, Texas, and Columbus, Ohio, followed The City of Lights in leading the nation in price appreciation among large cities.

Midsize city breakthrough

Challenged by a housing shortage and pressure from big cities, midsized markets saw rents soar in 2017. Cities like Sacramento, Calif., struggled with an 8.8% increase in rental prices. Renters in the city paid an average of $1,294 per month.

Stockton, Calif., Arlington, Texas, and Colorado Springs, Colo., saw annual rental price appreciations of 7.8%, 6.3% and 6.2%, respectively.

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Small cities, big price tags

Small cities took center stage with incredible growth rates. Renters in cities like Odessa and Midland, Texas, spent more than $3,400 extra in rent in 2017, since prices rose 33.6% and 28.2%, respectively.

Rental costs in Buffalo, N.Y., grew 10.3%, while prices in Lancaster, Calif., jumped 9.8%.