Rentals are becoming more and more expensive. Indeed, in April 2015, rents were 4% higher than a year before. It is the fastest rise in 2 years. It has even outpaced the prices of homes that have risen by 3%.
The situation is worsening itself as regards to rental affordability and improvements are long to be seen. Rentals shall still increase to a certain point to then hopefully get better. Such is the trend if one trusts the steady rise that has been observed since 2000. There has been no important disruption showing any slowdown in rent prices as compared to home prices that have been struck hard when the bubble exploded.
The issue is that while rentals have increased, income has not kept up with it. It results in tenants having to pay more from their income to afford rent. It has risen concern nationwide: indeed, 20 of the 35 biggest markets in the USA have experienced such increase of rents going up faster than home values.
Thankfully, the demand for rentals remains quite strong despite the price increase. This leads cities such as San Francisco or Seattle to undergo a housing crunch because keeping up with demand would mean building more and more units.
Rent prices rose by 14.9% in San Francisco, 3.4% in New York and 3.2% in Miami in April from last year. On a national level, there are only 2 cities that have undergone a decline in rent as compared to last year: these are Chicago and Minneapolis.
In order to make home purchasing appealing, mortgage rates tend to become lower and lower. However, the larger rent checks are, the better they can make saving in case of down payments. In the USA, it looks as if homeowners can pay 15.3% of their income on average on
On a national level, homeowners can pay an average of 15.3% of their monthly income on mortgage payments. On the other hand, it represents 30% of renters’ monthly incomes to be spent on rent. Those who live in high-income areas would pay about 50% of their income on rents.