Photo (cc) by amslerPIX
Good news for renters: The Zillow Rent Forecast for December projects “a big slowdown in rents” over the course of 2016.
The bad news is that this slowdown isn’t enough to negate rental affordability problems.
As Svenja Gudell, Zillow chief economist, says:
“The slowdown in rental appreciation will provide some relief for renters who’ve been seeing their rents rise dramatically every single year for the past few years.
However, the situation remains tough on the ground: Rents are still rising, and renters are struggling to keep up.”
As of December, the median rent in the United States had grown by 3.3 percent over the course of 2015, reaching $1,381 per month, according to Zillow.
Over the course of 2016, however, the real estate website expects the median rent to slow to only 1.1 percent by December, reaching $1,396 per month.
Zillow attributes this slowed growth to the supply of rental units catching up with the demand:
After years of struggling to meet rampant demand from renters young and old, apartment developers have ramped up in a number of large U.S. markets. Enough new units have now been brought online to help blunt some of the rental appreciation we’ve been seeing.
The Zillow Rent Forecast includes projections for the 50 largest metropolitan markets in the U.S. Of those 50 areas, Zillow projects the median rent will decrease this year in 14 areas:
- Indianapolis — 3.6 percent decrease projected in median rent
- Las Vegas — 1.8 percent decrease
- Oklahoma City — 1.8 percent
- Chicago — 1.4 percent
- Milwaukee — 1.4 percent
- Richmond, Virginia — 1.3 percent
- Pittsburgh — 1 percent
- Baltimore — 0.7 percent
- St. Louis — 0.7 percent
- Cleveland — 0.6 percent
- Memphis, Tennessee — 0.6 percent
- Philadelphia — 0.5 percent
- Birmingham, Alabama — 0.4 percent
- Detroit — 0.4 percent
The 10 cities where Zillow projects the most growth in rent rates are:
- San Jose, California — 7.8 percent increase projected in median rent
- Buffalo, New York — 7.4 percent increase
- San Francisco — 5.9 percent
- Seattle — 4.5 percent
- Denver — 4 percent
- Portland, Oregon — 3.8 percent
- Miami-Fort Lauderdale — 3.5 percent
- Austin, Texas — 3.4 percent
- Sacramento, California — 3.4 percent
- Louisville, Kentucky — 3.2 percent
How do you expect rent rates to fare in your area this year? Sound off in our Forums. It’s the place where you can speak your mind, explore topics in-depth, and post questions and get answers.