Rental Prices Climb to 6% Over Year Ago in May: Trulia

Despite record low mortgage rates, the rental market is booming as homeownership remains an unappealing or unattainable option to a growing number of Americans.
In May, rents nationally were 6 percent higher than they were a year ago, up from the 5.4 percent year-over-year rent increase in April, and 4.8 percent in March, according to the real estate site Trulia.
The biggest markets: San Francisco rents rose 14.4 percent year-over-year in May; Oakland, Miami, and Denver rents are also up over 10 percent compared to a year ago. Of the 25 largest rental markets in the U.S., only Las Vegas saw rents decline.
The foreclosure crisis has forced many into rentals, but there are other factors. Homeownership has become a bleak option for many, as about one-third of borrowers in the United States are underwater on their mortgages and home prices have yet to make a sustained turnaround, particularly in the hardest hit regions.
However, soaring rental prices and historically low mortgage rates will push more consumers into home purchases as the economy recovers, said Jed Kolko, Trulia’s chief economist.
“Not only are rents rising, they are rising faster every month and rents are up in all of the largest markets except for Las Vegas,” Kolko said. “The economy has strengthened enough to increase rental demand, but has yet to recover strongly enough for renters to become homeowners.”
 

Where Rents Rose Most Among Largest Rental Markets

#

U.S. Metro

Y-o-Y % Change in Asking Rent, May 2012

1

San Francisco, CA

14.4%

2

Oakland, CA

11.4%

3

Miami, FL

11.3%

4

Denver, CO

10.5%

5

Boston, MA

9.8%

6

Seattle, WA

9.6%

7

Houston, TX

9.2%

8

Portland, OR-WA

6.8%

9

Chicago, IL

6.4%

10

New York, NY-NJ

5.9%

Source: Trulia

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