Dive Brief:
- The Zillow Rent Index (ZRI) increased 4% year-over-year, exacerbating the "rental crisis," or the severe lack of affordable options for tenants. The ZRI for the U.S. in April was $1,364. Rent outpaced home values in 20 of the country's 35 biggest markets.
- Home value growth has risen 3% this year, according to Zillow. In 2014, home values grew to 4.9%.
- Home values are expected to continue slowing down, with a prediction of only 2% growth for 2016.
Dive Insight:
Low mortgage rates and increasing affordability make homebuying more economically feasible and raise demand.
Reports of booming demand for apartments and skyrocketing rents isn't new, but the trend seems to be continuing its upward climb. The lack of available apartments gives building owners the opportunity to charge rents that are rising much faster than wages.
According to Zillow, average U.S. homebuyers spend about 15.3% of their monthly income on a typical home payment, while renters spend about 30% on monthly rent.
As builders meet the growing request of apartment construction, however, the rental market over time could ease.
